5. Costs in the short run versus in the long run Scooter's Scooters is a large American manufacturer of electric scooters operating out of Spokane. Currently, the company produces all of its scooters using 2 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 preduction 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) Mumber of Factories Q=100 Q=200 Q=300 Q=400 Q=500 Q=600 1 360 200 180 240 400 720 2 540 300 160 160 200 540 3 720 400 240 160 200 260 Suppose Scooter's Scooters is currently preducing 500 scooters per month in its only factory. Its short-run average total cost is |2 per scooter. Suppose Scooter's Scooters is expecting to produce 500 scooters per month for several years. In this case, in the long run, it would choose to produce scooters using - o, On the following graph, plot the three SRATC curves for Scooter's Scooters from the previous table. Specifically, use the green points (triangle symbaol) to plot its SRATC curve if it operates one factory ( SRATC,); use the purple points (diamond symbol) to plot its SRATC curve if it operates tweo factories (SRATC,); and use the orange points (square symbol) to plot its SRATC curve if it operates three factories (SRATCY). Finally, plot the long-run average total cost (LRATC) curve for Scooter's Scooters using the blue points (circle symbel). Mote: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically. @ a00 Fay 720 g s SRATC, B 5 s - - SRATC 8 2 & -0 8 20 SRATC, = 240 O 180 E LRATC a0 a + 0 100 200 300 400 500 600 700 QUANTITY (Scooters) In the following table, indicate whether the long-run average cost curve exhibits economies of scale, constant retumns to scale, or diseconomies of seale for each range of scooter production. Range Economies of Scale Constant Returns to Scale Diseconomies of Scale Fewer than 300 scooters per manth Q0 o Q Betwesn 200 and 400 scooters per month More than 400 scooters per month o o o