What happens to a firm's average total cost when it experiences an increase in fixed costs while maintaining the same level of production?

When a firm experiences an increase in fixed costs, its average total cost will rise, even if the level of production stays the same. Fixed costs are expenses that do not change with the level of output, like rent or salaries. Since average total cost is calculated by adding total fixed costs to total variable costs and then dividing by the number of units produced, an increase in fixed costs means the total cost goes up. For example, if a factory pays $10,000 in rent and produces 1,000 units, its average total cost is $10. If the rent increases to $12,000, the average total cost rises to $12, even though production remains at 1,000 units.