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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 Boise. 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 1 440 280 2 620 3 is 800 per scooter. 380 one factory 480 Average Total Cost (Dollars per scooter) Q = 300 Q = 400 240 320 240 320 240 240 Q = 500 480 380 Suppose Scooter's Scooters is currently producing 600 scooters per month in its only factory. Its short-run average total cost 280 Q = 600 800 620 440 Suppose Scooter's Scooters is expecting to produce 600 scooters per month for several years. In this case, in the long run, it would choose to produce scooters using one factory

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 Boise. 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 1 440 280 2 620 3 is 800 per scooter. 380 one factory 480 Average Total Cost (Dollars per scooter) Q = 300 Q = 400 240 320 240 320 240 240 Q = 500 480 380 Suppose Scooter's Scooters is currently producing 600 scooters per month in its only factory. Its short-run average total cost 280 Q = 600 800 620 440 Suppose Scooter's Scooters is expecting to produce 600 scooters per month for several years. In this case, in the long run, it would choose to produce scooters using one factory

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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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 (SRATC₁); 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. AVERAGE TOTAL COST (Dollars per scooter) 800 720 640 560 480 400 320 240 160 80 0 0 100 200 300 400 QUANTITY (Scooters) 500 600 700 SRATC₁ SRATC2 SRATC3 LRATC
Transcribed Image Text: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 (SRATC₁); 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. AVERAGE TOTAL COST (Dollars per scooter) 800 720 640 560 480 400 320 240 160 80 0 0 100 200 300 400 QUANTITY (Scooters) 500 600 700 SRATC₁ SRATC2 SRATC3 LRATC
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 Boise. 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 1 440 is 2 3 620 800 per scooter. 280 one factory 380 480 Average Total Cost (Dollars per scooter) Q = 300 = 400 240 320 240 240 240 320 Q = 500 480 380 280 Q = 600 800 Suppose Scooter's Scooters is currently producing 600 scooters per month in its only factory. Its short-run average total cost 620 440 Suppose Scooter's Scooters is expecting to produce 600 scooters per month for several years. In this case, in the long run, it would choose to produce scooters using one factory
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 Boise. 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 1 440 is 2 3 620 800 per scooter. 280 one factory 380 480 Average Total Cost (Dollars per scooter) Q = 300 = 400 240 320 240 240 240 320 Q = 500 480 380 280 Q = 600 800 Suppose Scooter's Scooters is currently producing 600 scooters per month in its only factory. Its short-run average total cost 620 440 Suppose Scooter's Scooters is expecting to produce 600 scooters per month for several years. In this case, in the long run, it would choose to produce scooters using one factory
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