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 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 {Doars per scooter) Number of Factories Q = 50 Q = 100 Q = 150 Q = 200 Q = 250 Q = 300 1 140 60 4O 80 160 320 2 230 110 40 40 110 230 3 320 160 80 4O 60 140 Suppose Scooter's Scooters is currently producing 300 scooters per month in its only factory. Its shortrun average total cost is E per scooter. Suppose Scooter's Scooters is expecting to produce 300 scooters per month for several years. In this case, in the long run, it would choose to produce scooters using V . 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 (S'RATO1); 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 symbol). Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically. 400 A 360 SRATC 320 280 240 SRATC ? -0- 200 AVERAGE TOTAL COST (Dollars per scooter) 160 SRATC3 120 O 80 LRATC 40 0 150 300 350 50 100 200 250 QUANTITY (Scooters)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. Range Economies of Scale Constant Returns to Scale Diseconomies of Scale Fewer than 150 scooters per month O O O More than 200 scooters per month O O O Between 150 and 200 scooters per month O O