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 Average Total Cost (Dollars per scooter) Q 500 1000 1500 2000 2500 = 300
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 Average Total
Cost (Dollars per scooter) Q 500 1000 1500 2000 2500
= 300 1 180 100 80 120 200 360 2 270 150 80 80 150 270 3 360 200 120 80 100 180 Suppose Scooter's Scooters is currently producing 50 scooters per month in its only factory, Its short-run average total cost is 5 per scooter. Suppose Scooter's Scooters is expecting to produce 50 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 ( 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 lang run average total cost (LRATC) curve for Scooter's Scooters using the blue paints (circle symbol). Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically. SRATC 1 SRATC 2 SRATC 3 LRATC 0 50 100 150 200 250 300 350 400 360 320 280 240 200 160 120 80 40 0 AVERAGE TOTAL COST (Dollars per scooter) QUANTITY (Scooters) 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. Range Economies of Scale Constant Returns to Scale Diseconomies of Scale More than 200 scooters per
month Fewer than 150 scooters per month Between 150 and 200 scooters per month.
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