5. A so-called "step cost" arises when some factor of production is acquired in specific, integer units. To illustrate, it might be possible to lease machine time at the rate of 5, 000 per unit, where units are measured in thousands of hours. So any number of hours of machine time strictly above zero and below 1, 000 will cost 5, 000; any number between 1, 000 and strictly below 2, 000 will cost 10, 000, and so on.

(a) Plot the implied cost curve.

(b) In such a situation we often hear someone say "If we expand output, our fixed costs will increase." Carefully analyze this statement, in economic terms and in accounting terms.