1 . Individual Problems 7-3

The variety of Riverside Ranger logo T-shirts includes 12 different designs. Setup between designs takes one hour (and $21,000), and, after setting up, you can produce 1,000 units of a particular design per hour (at a cost of $11,000).

Note: Assume Qdenotes the quantity produced of a particular design.

Which of the following best represents the average cost function for producing any single design?

AC=$21,000+$11

AC=$21,000+$11/Q

AC=$21,000/Q+$11

AC=$21,000+$11,000

Based on this information, production in any one single design ________(exhibits or does not exhibit) economies of scale.