If total fixed cost increases, then the average total cost curve ________ and the marginal cost curve ________.
A) does not shift; shifts upward
B) shifts upward; shifts upward
C) does not shift; does not shift
D) shifts upward; does not shift

Question

Quizplus · Accepted Answer

The average total cost curve shifts upward because total fixed cost is part of total cost, affecting average total cost. The marginal cost curve does not shift because marginal cost is only affected by changes in variable costs, not fixed costs.

If Total Fixed Cost Increases, Then the Average Total Cost