For each of the UMGC events below (a)- (e), identify, as indicated, whether MC (marginal cost), AVC (average variable cost), AFC, (average fixed cost) and AC (average total cost) increase, decrease, or remain the same. For this exercise, think of the number of classes taught as the output, so that all variable costs are related to what's necessary to produce an additional class.(3 points; 0.6 points per segment; 0.15 points per answer)

Notes: Marginal Cost (MC) (For any given unit of output, if the cost of a variable input rises, so does the MC, which means, by the way, that the MC curve shifts up (to the left).)

Average Variable Cost (AVC) (Note: if MC rises, so does AVC and AC, which means, by the way, that the AVC and AC curves shift up,)

Average Fixed Cost (AFC) (If AFC rises, AC (average total cost) also rises.)

1. UMGC increases per-class payments to adjunct faculty. (-

Marginal Cost (MC) Answer:

Average Variable Cost (AVC) Answer:

Average Fixed Cost (AFC) Answer:

Average Total Cost (AC) Answer:

1. UMGC increases administrative salaries by 5%.(Remember, for any given year, administrative salaries are independent of the number of classes offered.) (-

Marginal Cost (MC) Answer:

Average Variable Cost (AVC) Answer:

Average Fixed Cost (AFC) Answer:

Average Total Cost (AC or ATC) Answer:

1. UMGC decides to increase significantly its advertising budget in the U.S. (Is the advertising budget for a given year related to operating expenditures, i.e., offering classes?Or is it a fixed cost?) (-

Marginal Cost (MC) Answer:

Average Variable Cost (AVC) Answer:

Average Fixed Cost (AFC) Answer:

Average Total Cost (AC or ATC) Answer:

1. Annual rents for office space around the world decrease by 10%. (-

Marginal Cost (MC) Answer:

Average Variable Cost (AVC) Answer:

Average Fixed Cost (AFC) Answer:

Average Total Cost (AC or ATC) Answer:

1. Utility prices around the world rise as oil prices continue to increase. (-

Marginal Cost (MC) Answer:

Average Variable Cost (AVC) Answer:

Average Fixed Cost (AFC) Answer:

Average Total Cost (AC or ATC) Answer: