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Costs in the short run versus in the long run Scooter's Scooters is a large American manufacturer of electric scooters operating out of Lansing. Currently,
Costs in the short run versus in the long run Scooter's Scooters is a large American manufacturer of electric scooters operating out of Lansing. 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 shortrun 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. Suppose Scooter's Scooters is currently producing scooters per month in its only factory. Its shortrun average total cost is per scooter. Suppose Scooter's Scooters is expecting to produce 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 SRATC ; use the purple points diamond symbol to plot its SRATC curve if it operates two factories SRATC ; and use the orange points square symbol to plot its SRATC curve if it operates three factories SRATC Finally, plot the longrun average total cost LRATC curve for Scooter's Scooters using the blue points circle symbol Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically. In the following table, indicate whether the longrun average cost curve exhibits economies of scale, constant returns to scale, or diseconomies of scale for each range of scooter production.
Costs in the short run versus in the long run
Scooter's Scooters is a large American manufacturer of electric scooters operating out of Lansing. 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 shortrun 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.
Suppose Scooter's Scooters is currently producing scooters per month in its only factory. Its shortrun average total cost
is
per scooter.
Suppose Scooter's Scooters is expecting to produce 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 SRATC ; use the purple points diamond symbol to plot its SRATC curve if it operates
two factories SRATC ; and use the orange points square symbol to plot its SRATC curve if it operates three factories SRATC Finally, plot
the longrun average total cost LRATC curve for Scooter's Scooters using the blue points circle symbol
Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically.
In the following table, indicate whether the longrun average cost curve exhibits economies of scale, constant returns to scale, or diseconomies of
scale for each range of scooter production.
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