Problem:
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.
Required:
Question 1: What are the fixed costs of hamburger production?
Question 2: What is the variable cost per hamburger?
Question 3: What is the average cost per burger when the firm produces 1 million hamburgers?
Question 4: What is the average cost per burger when the firm produces 2 million hamburgers? Please provide all workings and formulas and also provide step by step solution.