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Suppose Scooter's Scooters is currently producing 600 scooters per month in its only factory. Its short-run average total cost is $ per scooter. Suppose Scooter's Scooters is expecting to produce 600 scooters per month for several years. In this case, in the long run, it would choose to produce scooters using

Suppose Scooter's Scooters is currently producing 600 scooters per month in its only factory. Its short-run average total cost is $ per scooter. Suppose Scooter's Scooters is expecting to produce 600 scooters per month for several years. In this case, in the long run, it would choose to produce scooters using

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter8: Cost Analysis
Section: Chapter Questions
Problem 6E
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AVERAGE TOTAL COST (Dollars per scooter) 800 720 640 560 480 400 320 240 160 80 0 0 100 200 400 QUANTITY (Scooters) 300 Range Between 300 and 400 scooters per month Fewer than 300 scooters per month 500 More than 400 scooters per month 600 700 SRATC SRATC O SRATC O- LRATC Economies of Scale 1 In the following table, indicate whether the long-run average cost curve exhibits economies of scale, constant returns to scale, or diseconomies of scale for each range of scooter production. Constant Returns to Scale 2 3 (?) O Diseconomies of Scale о
Transcribed Image Text:AVERAGE TOTAL COST (Dollars per scooter) 800 720 640 560 480 400 320 240 160 80 0 0 100 200 400 QUANTITY (Scooters) 300 Range Between 300 and 400 scooters per month Fewer than 300 scooters per month 500 More than 400 scooters per month 600 700 SRATC SRATC O SRATC O- LRATC Economies of Scale 1 In the following table, indicate whether the long-run average cost curve exhibits economies of scale, constant returns to scale, or diseconomies of scale for each range of scooter production. Constant Returns to Scale 2 3 (?) O Diseconomies of Scale о
Scooter's Scooters is a large American manufacturer of electric scooters operating out of Fort Collins. Currently, the company produces all of its scooters using a single manufacturing facility, its factory in town. Recently, management has been considering expanding operations to one or two additional factories. The following table presents the manufacturer's monthly short-run average total cost (SRATC) for various levels of production if it operates out of one, two, or three factories. (Note: Q equals the total quantity of scooters produced by all factories.) Average Total Cost (Dollars per scooter) Number of Factories Q = 100 Q = 200 Q = 300 Q = 400 Q = 500 Q = 600 440 280 240 320 480 800 620 380 240 240 380 620 800 480 320 240 280 440 123 2 3 Suppose Scooter's Scooters is currently producing 600 scooters per month in its only factory. Its short-run average total cost is $ per scooter. Suppose Scooter's Scooters is expecting to produce 600 scooters per month for several years. In this case, in the long run, it would choose to produce scooters using On the following graph, plot the three SRATC curves for Scooter's Scooters from the previous table. Specifically, use the green points (triangle symbol) to plot its SRATC curve if it operates one factory ( SRATC1); use the purple points (diamond symbol) to plot its SRATC curve if it operates two factories ( SRATC2); and use the orange points (square symbol) to plot its SRATC curve if it operates three factories (SRATC3). Finally, plot the long-run average total cost (LRATC) curve for Scooter's Scooters using the blue points (circle symbo Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically.
Transcribed Image Text:Scooter's Scooters is a large American manufacturer of electric scooters operating out of Fort Collins. Currently, the company produces all of its scooters using a single manufacturing facility, its factory in town. Recently, management has been considering expanding operations to one or two additional factories. The following table presents the manufacturer's monthly short-run average total cost (SRATC) for various levels of production if it operates out of one, two, or three factories. (Note: Q equals the total quantity of scooters produced by all factories.) Average Total Cost (Dollars per scooter) Number of Factories Q = 100 Q = 200 Q = 300 Q = 400 Q = 500 Q = 600 440 280 240 320 480 800 620 380 240 240 380 620 800 480 320 240 280 440 123 2 3 Suppose Scooter's Scooters is currently producing 600 scooters per month in its only factory. Its short-run average total cost is $ per scooter. Suppose Scooter's Scooters is expecting to produce 600 scooters per month for several years. In this case, in the long run, it would choose to produce scooters using On the following graph, plot the three SRATC curves for Scooter's Scooters from the previous table. Specifically, use the green points (triangle symbol) to plot its SRATC curve if it operates one factory ( SRATC1); use the purple points (diamond symbol) to plot its SRATC curve if it operates two factories ( SRATC2); and use the orange points (square symbol) to plot its SRATC curve if it operates three factories (SRATC3). Finally, plot the long-run average total cost (LRATC) curve for Scooter's Scooters using the blue points (circle symbo Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically.
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