Suppose the AC curve is U-shaped.Then an increase in a recurring fixed cost will cause the AC curve to shift up, with its lowest point shifting to the right.

Question

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In a U-shaped AC curve, the lowest point represents the point of minimum average cost. If there is an increase in recurring fixed cost, it will increase the average cost at all levels of output, shifting the entire AC curve upwards. This means that the lowest point will also shift to the right, indicating a higher minimum average cost level.

Suppose the AC Curve Is U-Shaped