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 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.) Number of Factories Q = 100 1 360 2 540 AVERAGE TOTAL COST (Dollars per scooter) 800 720 640 Suppose Scooter's Scooters is currently producing 500 scooters per month in its only factory. Its short-run average total cost is S 560 480 Suppose Scooter's Scooters is expecting to produce 500 scooters per month for several years. In this case, in the long run, it would choose to produce scooters using 400 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 (SRATC); 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 (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. ? 320 240 160 3 80 0 0 720 100 200 Q = 200 200 300 400 300 400 QUANTITY (Scooters) Range Between 300 and 400 scooters per month More than 400 scooters per month Average Total Cost (Dollars per scooter) Q = 300 Q = 400 240 160 160 Fewer than 300 scooters per month 500 160 160 240 600 O 700 O SRATC 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. O = 500 Q = 600 400 720 300 540 200 360 SRATC₂ -0- SRATC O LRATC Economies of Scale Constant Returns to Scale Diseconomies of Scale O O per scooter. O O O