Suppose Rob is currently producing 1,000 hamburgers per month at a total cost of $100. What is...
Question:
Suppose Rob is currently producing 1,000 hamburgers per month at a total cost of $100.
What is his average total cost of production?
Average Cost of Production:
Producers have the role of determining the cost of production to ascertain whether the organization is running at a profit or loss. Notably, the production cost should be maintained at its lowest possible levels.
Answer and Explanation: 1
The Average Total Cost (ATC) of production refers to the average cost per unit produced.
The formula is
ATC= Total Cost (TC) / Total Quantity produced (TQ).
ATC= TC/TQ
//
In this case,
TC= $100
TQ= 1000 hamburgers
Therefore
ATC= 100/ 1000
ATC= $0.1
The average costs of producing one hamburger is $0.1
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