1 . Individual Problems 7-3

The variety of Riverside Ranger logo T-shirts includes 12 different designs. Setup between designs takes one hour (and $25,000), and, after setting up, you can produce 1,000 units of a particular design per hour (at a cost of $5,000).

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=$25,000+$5,000AC=$25,000+$5,000

AC=$25,000Q+$5AC=$25,000+$5

AC=$25,000+$5QAC=$25,000+$5

AC=$25,000+$5AC=$25,000+$5

Based on this information, production in any one single design economies of scale.