Question

Open the monopoly interactive and use it to answer the question. Note that you may want to use the "Advanced" or "All" tab of the legend to turn on display of some of these elements. Categorize cach of the choices according to whether or not they would change if fixed cost changes. Affected by fixed cost Not affected Answer Bank demand (D) curve profit or loss averape variable cost (AVC) curve marginal cost (MC) curve average total cost (ATC) curve the profit-maximizing quantity average fixed cost (AFC) curve

Answer 1

1.

Demand curve: Not affected (demand curve is determined by consumers)

Profit or loss: Affected (as FC will affect total cost)

AVC curve: Not affected (as variable costs do not include fixed costs)

MC curve: Not affected (MC is only affected by variable costs)

ATC curve: Affected (as total cost includes fixed cost)

Profit maximizing quantity: Not affected (as profit maximizing quantity depends on MR and MC only)

AFC curve: Affected (as AFC = FC/Q)

2.

Incomplete question