If a firm's rent increases,it will affect its cost structure in which of the following ways?
A)AVC will increase.
B)MC will increase.
C)TFC will increase.
D)All of the above will increase.

Question

Quizplus · Accepted Answer

Rent is a fixed cost, which means it is included in the total fixed cost (TFC) of a firm. Therefore, if the rent increases, TFC will increase. The increase in TFC will not affect the average variable cost (AVC) or the marginal cost (MC) of the firm, as these costs are based on the variable inputs that are required to produce a good or service.

If a Firm's Rent Increases,it Will Affect Its Cost Structure