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Hints on changing variable costs

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If the variable 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 variable costs on the break even point

The total cost curves pivots upwards. This causes the profits to fall for any given quantity and the break-even point to be at a higher output level.

INCREASE IN VARIABLE COSTS » INCREASES BREAK EVEN LEVEL OF OUTPUT

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