ABCD Inc. is a shoe company, they have decided to build a new manufacturing facility because they have developed modern technology to help in the production of their sneakers. The new facility will be able to process up to 10,000 pairs of sneakers per year, but this year is only expected to produce 7,000 pairs. ABCD Inc.'s first facility uses the same technology and has processed 12,000 shoes per year with a full production capacity of 12,000. Draw the long run and short-run average cost curve for ABCD’s new facility and first facility and indicate where the MES is most likely to occur.
ABCD Inc. is a shoe company, they have decided to build a new manufacturing facility because they have developed modern technology to help in the production of their sneakers. The new facility will be able to process up to 10,000 pairs of sneakers per year, but this year is only expected to produce 7,000 pairs. ABCD Inc.'s first facility uses the same technology and has processed 12,000 shoes per year with a full production capacity of 12,000. Draw the long run and short-run average cost curve for ABCD’s new facility and first facility and indicate where the MES is most likely to occur.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
ABCD Inc. is a shoe company, they have decided to build a new manufacturing facility because they have developed modern technology to help in the production of their sneakers. The new facility will be able to process up to 10,000 pairs of sneakers per year, but this year is only expected to produce 7,000 pairs. ABCD Inc.'s first facility uses the same technology and has processed 12,000 shoes per year with a full production capacity of 12,000.
Draw the long run and short-run average cost curve for ABCD’s new facility and first facility and indicate where the MES is most likely to occur.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education