QUESTION:Draw a graph to illustrate The Coffee Club's cost curves as it opens more and more cafe?s in the Middle East.

k EYE on the NEWS Expanding Capacity at The Coffee Club The Coffee Club Signs Deal to Expand to 100 Outlets in Persian Gulf The Australian 28 October 20I 3 Queensland cafe empire The Coffee Club, Australia's biggest home-grown coffee chain, has signed a deal to expand its Middle Eastern presence from three outlets to 100. The group has signed a licensing agreement with Liwar Minor Food 8: Beverages, a joint venture between A1 Nasser Holdings, an Abu Dhabi-based conglomerate with retail interests, and Minor Food Group, a Thai-based restaurant franchise whose parent company owns 50 per cent of The Coffee Club. Under the deal, The Coffee Club will 0pm the cafes in the Gulf Ctr-operation Council (GCC) region, which includes Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates, by 2023. \"The GCC states represent huge growth potential for The Coffee Club brand and we are excited by the new partnership and look forward to the first store opening in the new year," The Coffee Club's chief executive Jason Ball said in a statement. The Coffee Club owns 335 cafs in Essence of the Story seven countries, including 267 in Australia. - The Co'ee Club started with It signed a deal in August to expand water'ont cafe in Brisbane in into Malaysia and plans to have a I989 and is Australia's biggest presence in 14 countries within the next homegrown caf chain- decade. U it owns 335 cafs in seven coun The company, which started with a tries. 26? in Australia. Brisbane City Wateff'lont caf in 1989, is I It plans to expand [3 Middle Australia's biggest home-grown Cf Eastern presence from three out chain. lets, all in Egypt, to IDO spread The Coffee Club's existing Middle across a number of countries. East presence consrsts of three cafes in . it also plans to expand Into Egypt. Malaysia @MP, 20\". Economic Analysis * The Coffee Club can increase output by hirir more labour or by increasing its plant size and hiring more labourexpanding the number of Its cafes. - The decision turns on comparing costs. and The Coffee Club has gured that it minimises cost by expanding the number of cafes and hiring more labour: 0 We don't know The Coffee Club' costs. but we can gain insight into the firm's decision with an example. . Table l shows some assumed data and Figure I graphs the marginal cost and m.\" 1 average total cost curves. w Mne- I If The Coffee Club wantsto increase production in a caf to more than 1.000 ml 0'\"me {3'0 \"aim\"?! ooees per day. marginal cost rises sharply. mun run:- nah rm) ' With a bigger capacity (an additional cafe). ned cost increases and average :'D-\" W? To; P _ total cost increases at small outputs but decreases at large outputs. . m m Lam 190 4.50 O Figure '2 shows The Coffee Club's original ATC curve. ATCO. and its new ATC c 2:: won 2,509 :2: 2.50 oirve, ATCI. after the rm has added one additional cafe. is an mm 3.400 4:00 2.52 ' Increasing output \"001 a larger plant size avoids the sharply rising marginal cost ' 4" \"5" 4'2\"\" gm \"0 of the original cafe (Figure I). ' 5" mm 1m\" 1'3 * With two cafes. The CofTee Club now hires more labour and as output increases above LOGO coees per day its average total cost eventually falls along ATC. . - Figure 2 also shows The Coffee Club's long-run average cost curve (LRAC). 0 If the rm wants to expand output to more than 2.000 coees per day. it can avoid average cost rising along ATCI. by opening additional cafes and move along it: long-run average cost more. Cost (dollars per on'ee) Cost (dolor! per coho) '0 500 | .000 |.500 2.000 0 l.000 2.000 3.000 om (calico: per day) Output (has per dip) gure I The Cell.- Clul Short-Illa Cost Curves Figure 3 TI- Col- Clubh Long-mm Cm C\