Question
In a slow year, Deutsche Burgers will produce 4 million hamburgers at a total cost of $4.8 million. In a good year, it can produce
In a slow year, Deutsche Burgers will produce 4 million hamburgers at a total cost of $4.8 million. In a good year, it can produce 5.2 million hamburgers at a total cost of $5.8 million.
a. What are the fixed costs of hamburger production? (Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places.)
b. What is the variable cost per hamburger? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
c. What is the average cost per burger when the firm produces 3 million hamburgers? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
d. What is the average cost per burger when the firm produces 4 million hamburgers? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
e. Why is the average cost lower when more burgers are produced?
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