Suppose a business experiences a sudden increase in its fixed costs.?
For example, suppose property taxes increase dramatically. What impact, if any, will this have the firm's AFC (average fixed cost), AVC (average variable cost), ATC (average total cost) and MC (marginal cost) and therefore these cost curves? Why?
Answer:
first you would need to take into account the CPI for each year... CPI base yr over CPI base yr2 times your cost of year one...to really tell you what the actual cost in fixed costs would be (thats taking into account inflation value of dollar all that good stuff)...but in terms of your AFC, ATC it would depend on if you have a constant quantity or your quantity changes. think of it as 4000 + 10x + 232Y^2 your variable costs would just be 10x+ 232^2 which would stay consistent.(unless there is a change in your raw goods...etc)
Mo Money, Mo Problems.
afc increases, the y1<y2(on the y axis)...same for all and marginal cost increases too
Then they lift the prices! that what they call inflation! You let the person at the bottom of the money ladder pay for inflation, the workers! simple economics. Have a good monetary day! lol.
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Answer:
first you would need to take into account the CPI for each year... CPI base yr over CPI base yr2 times your cost of year one...to really tell you what the actual cost in fixed costs would be (thats taking into account inflation value of dollar all that good stuff)...but in terms of your AFC, ATC it would depend on if you have a constant quantity or your quantity changes. think of it as 4000 + 10x + 232Y^2 your variable costs would just be 10x+ 232^2 which would stay consistent.(unless there is a change in your raw goods...etc)
Mo Money, Mo Problems.
afc increases, the y1<y2(on the y axis)...same for all and marginal cost increases too
Then they lift the prices! that what they call inflation! You let the person at the bottom of the money ladder pay for inflation, the workers! simple economics. Have a good monetary day! lol.
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