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


Learn more about this topic:

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Average Total Cost: Definition & Formula

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Chapter 3 / Lesson 23
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Learn what is the average total cost. Learn its use, its formula, and how to apply it.


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