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If the fixed costs increase then the total costs would increase (total costs = total fixed costs plus total variable costs). The effect is illustrated in the diagram.

an increase in fixed costs on the break even point

The total cost curves shift up in a parallel direction. This causes the profits to fall for any given quantity and the break-even point to be at a higher output level.

INCREASE IN FIXED COSTS » INCREASE IN BREAK EVEN LEVEL OF OUTPUT

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