A student association has hired a music group for a graduation party. The cost will be a fixed amount of €40 000.
Required
1. Suppose 500 people attend the party. What will be the total cost of the music group?
The unit cost per person?
2. Suppose 2000 people attend. What will be the total cost of the music group? The unit cost per person?
3. For prediction of total costs, should the manager of the party use the unit cost in requirement 1? The unit cost in requirement 2? What is the major lesson of this problem?