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Scooter's Scooters is a large American manufacturer of electric scooters operating out of Grand Rapids. Currently, the company produces all of its scooters using a
Scooter's Scooters is a large American manufacturer of electric scooters operating out of Grand Rapids. 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 (Dollars per scooter) Number of Factories Q = 75 Q = 150 Q = 225 Q = 300 Q = 375 Q = 450 1 130 100 80 100 140 200 NJ 165 120 80 80 120 165 200 140 100 80 100 130 Suppose Scooter's Scooters is currently producing 375 scooters per month in its only factory. Its short-run average total cost is $ per scooter. Suppose Scooter's Scooters is expecting to produce 375 scooters per month for several years. In this case, in the long run, it would choose to produce scooters using one factory On the following three SRATC curves for Scooter's Scooters from the previous table. Specifically, use the green points (triangle two factories symbol) to plot if it operates one factory (SRATO,); use the purple points (diamond symbol) to plot its SRATC curve if it operates two factories ( three factories se the orange points (square symbol) to plot its SRATC curve if it operates three factories (SRATO;). Finally, plot theOn 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 (SIRATO, ); 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 (SRATO;). 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. 200 A 1.80 SRATC. 180 140 120 SRATO 100 AVERAGE TOTAL COST (Dollars per scooter) 80 SRATO, O 40 LRATC 20 75 150 225 300 375 450 525 QUANTITY (Scooters)
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