Question

1.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 on the following: a. the firm's AFC (average fixed cost);

Answer 1

in this situation, the Average fixed cost wll be INCREASED.

AFC (average fixed cost) is calculated by adding up all total fixed cost within a certain period and divide it with the total years. If a business experienced an increased in any way to its fixed cost, the average will automatically increased.