5 What are the shapes of the AVC curve and ATC curve and why? An increase in the price of a factor of production increases costs and shifts the cost curves. But the way the curves shift depends on which factor price changes.

An increase in rent or some other component of fixed cost shifts the fixed cost curves ( TFC and AFC ) upward and the total cost curve ( TC ) upward, but leaves the variable cost curves ( AVC and TVC ) and the marginal cost curve ( MC ) unchanged. An increase in the wage rate or some other component of variable cost shifts the variable curves ( TVC and AVC ) upward, the total cost curve ( TC ) and the marginal cost curve ( MC )

upward, but leaves the fixed cost curves ( AFC and TFC )

unchanged.