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Deutsche Burgers Average Cost

In a slow year, Deutsche Burgers will produce 2 million hamburgers at a total cost of $3.5 million. In a good year, it can produce 4 million hamburgers at a total cost of 4.5 million.

a. What is the average cost per burger when the firm produces 1 million hamburgers?

b. What is average cost when the firm produces 2 million hamburgers?

c. Why is average cost lower when more burgers are produced?

Solution Preview

In a slow year, Deutsche Burgers will produce 2 million hamburgers at a total cost of $3.5 million. In a good year, it can produce 4 million hamburgers at a total cost of 4.5 million.

a. What is the average cost per burger when the firm produces 1 million hamburgers? ...

$2.19