NO EXTENSIONS Heather Lanus, 1. When a business experiences a sudden increase in

NO EXTENSIONS
Heather Lanus,
1. When a business experiences a sudden increase in fixed cost, with
different outcomes for different costs.
A. Average Fixed Cost (AFC)- The company’s AFC will increase because you
calculate it by dividing the total fixed costs by the quantity of output.
B. Average Variable Cost (AVC)- The company’s AVC will likely have no
change. You calculate the AVC by variable cost divided by the quantify
of output.
C. Average Total Cost (ATC)- The company’s ATC will be likely to increase
due to adding the AFC and the AVC together.
D. Marginal Cost (MC)- The company’s MC will not change due to MC
being influenced by the variable cost not the fixed costs. The way MC is
calculated is by dividing change in total cost by change in quantity of
output.
2. Changes to the curve
 AFC- The AFC curve will shift upward due to the increase change.
 AVC- The AVC curve will not change.
 ATC- The ATC curve will shift upward.
 MC- The MC curve will not change due to not being impacted by
the fixed costs.
3. A fixed cost in my home is my car payment, I know how much it is each
month. Some different variable costs in my house are propane, electric
and water bills. They are different each month due to the change in
usage.
4. If my fixed cost changes then it doesn’t directly affect my variable
costs. It could affect it by needing to make some changes to other
variable costs. I could make sure that water isn’t being used excessively
or that we are turning lights off that aren’t being used.