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3. Costs in the short run versus in the long run Scooter's Scooters is a large American manufacturer of electric scooters operating out of Detroit. 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.) Number of Factories Q 100 1 3 360 540 720 Q-200 200 300 400 Average Total Cost (Dollars per scooter) Q=300 Q 400 Q500 160 400 160 300 240 200 240 160 160 0-600 720 540 360 Suppose Scooter's Scooters is currently producing 100 scooters per month in its only factory. Its short-run average total cost is per scooter Suppose Scooter's Scooters is expecting to produce 100 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 (SRATO; 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 s SRATC curve if it operates three factories (SRATC). 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.

3. Costs in the short run versus in the long run Scooter's Scooters is a large American manufacturer of electric scooters operating out of Detroit. 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.) Number of Factories Q 100 1 3 360 540 720 Q-200 200 300 400 Average Total Cost (Dollars per scooter) Q=300 Q 400 Q500 160 400 160 300 240 200 240 160 160 0-600 720 540 360 Suppose Scooter's Scooters is currently producing 100 scooters per month in its only factory. Its short-run average total cost is per scooter Suppose Scooter's Scooters is expecting to produce 100 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 (SRATO; 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 s SRATC curve if it operates three factories (SRATC). 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.

Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter4: Extent (how Much) Decisions
Section: Chapter Questions
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3. Costs in the short run versus in the long run Scooter's Scooters is a large American manufacturer of electric scooters operating out of Detroit. 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.) Number of Factories Q-100 Q-200 1 360 200 2 540 300 3 720 400 Average Total Cost (Dollars per scooter) Q=300 Q 400 9 500 160 240 400 160 160 300 240 200 160 0600 720 540 360 Suppose Scooter's Scooters is currently producing 100 scooters per month in its only factory. Its short-run average total cost is per scooter Suppose Scooter's Scooters is expecting to produce 100 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 (SRATO; 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 plotits SRATC curve if it operates three factories (SRATC₂). 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.
Transcribed Image Text:3. Costs in the short run versus in the long run Scooter's Scooters is a large American manufacturer of electric scooters operating out of Detroit. 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.) Number of Factories Q-100 Q-200 1 360 200 2 540 300 3 720 400 Average Total Cost (Dollars per scooter) Q=300 Q 400 9 500 160 240 400 160 160 300 240 200 160 0600 720 540 360 Suppose Scooter's Scooters is currently producing 100 scooters per month in its only factory. Its short-run average total cost is per scooter Suppose Scooter's Scooters is expecting to produce 100 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 (SRATO; 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 plotits SRATC curve if it operates three factories (SRATC₂). 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.
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's); and use the orange points (square symbol) to plot its SRATC curve if it operates three factories (SRATC₂). 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. AVERAGE TOTAL COST (Dollars per scooter) 800 720 640 500 400 400 320 240 100 DO o 100 200 300 400 QUANTITY (Scooters) 500 Range More than 400 scooters per month Between 300 and 400 scooters per month Fewer than 300 scooters per month 000 700 A SRATC SRATC - SRATC LRATC 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. Economies of Scale Constant Returns to Scale Diseconomies of Scale
Transcribed Image Text: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's); and use the orange points (square symbol) to plot its SRATC curve if it operates three factories (SRATC₂). 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. AVERAGE TOTAL COST (Dollars per scooter) 800 720 640 500 400 400 320 240 100 DO o 100 200 300 400 QUANTITY (Scooters) 500 Range More than 400 scooters per month Between 300 and 400 scooters per month Fewer than 300 scooters per month 000 700 A SRATC SRATC - SRATC LRATC 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. Economies of Scale Constant Returns to Scale Diseconomies of Scale
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