In a slow year, Deutsche Burgers will produce 3.2 million hamburgers at a total cost of $4.2 million
Question
In a slow year, Deutsche Burgers will produce 3.2 million hamburgers at a total cost of $4.2 million. In a good
year, it can produce 4.8 million hamburgers at a total cost of $5.4 million.
| a. | What are the fixed costs of hamburger production? (Do not round intermediate calculations. Enter your answer in millions rounded to 1 decimal place.) |
| Fixed cost | $ million |
| b. | What is the variable cost per hamburger? (Do not round intermediate calculations. Round your answer to 2 decimal places.) |
| Variable cost | $ per burger |
| c. | What is the average cost per burger when the firm produces 2 million hamburgers? (Do not round intermediate calculations. Round your answer to 2 decimal places.) |
| Average cost | $ per burger |
| d. | 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.) |
| Average cost | $ per burger |
| e. | Why is the average cost lower when more burgers are produced? |
| The fixed costs are spread across more burgers.Fixed costs are constant per burger.Variable costs are lower per burger. |
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