Scooter's Scooters is a large American manufacturer of electric scooters operating out of Mesa. 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 1 360 2 540 3 720 Q = 200 200 300 400 Average Total Cost (Dollars per scooter) Q = 300 Q = 400 Q = 500 160 240 400 160 160 240 160 300 200 Q = 600 720 540 360 Suppose Scooter's Scooters is currently producing 600 scooters per month in its only factory. Its short-run average total cost is $ per scooter. 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
Scooter's Scooters is a large American manufacturer of electric scooters operating out of Mesa. 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 1 360 2 540 3 720 Q = 200 200 300 400 Average Total Cost (Dollars per scooter) Q = 300 Q = 400 Q = 500 160 240 400 160 160 240 160 300 200 Q = 600 720 540 360 Suppose Scooter's Scooters is currently producing 600 scooters per month in its only factory. Its short-run average total cost is $ per scooter. 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
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
Problem 3MC
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![5. Costs in the short run versus in the long run
Scooter's Scooters is a large American manufacturer of electric scooters operating out of Mesa. 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
360
2
3
540
720
Q = 200
200
300
400
Average Total Cost
(Dollars per scooter)
Q = 300 Q = 400
160
240
160
240
160
160
Q = 500
400
300
200
Q = 600
720
540
360
Suppose Scooter's Scooters is currently producing 600 scooters per month in its only factory. Its short-run average total cost is $
per scooter.
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](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F54a8aaf0-33bb-4852-8626-10bc04f79eb3%2F37220329-61ff-496e-a58c-fe7975966c4f%2Fbuqgm35_processed.png&w=3840&q=75)
Transcribed Image Text:5. Costs in the short run versus in the long run
Scooter's Scooters is a large American manufacturer of electric scooters operating out of Mesa. 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
360
2
3
540
720
Q = 200
200
300
400
Average Total Cost
(Dollars per scooter)
Q = 300 Q = 400
160
240
160
240
160
160
Q = 500
400
300
200
Q = 600
720
540
360
Suppose Scooter's Scooters is currently producing 600 scooters per month in its only factory. Its short-run average total cost is $
per scooter.
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
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