Suppose Scooter's Scooters is currently producing 100 scooters per month in its only factory. Its short-run average total cost is $ per scooter. Suppose Scooter's Scooters is expecting to produce 100 scooters per month for several years. In this case, in the long run, it would choose to produce cooters using

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Chapter1: Making Economics Decisions
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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.)
Average Total Cost
(Dollars per scooter)
Number of Factories
Q = 100 Q = 200
Q = 300 Q = 400
Q = 500
Q
= 600
1
360
200
160
240
400
720
2
540
300
160
160
300
540
3
720
400
240
160
200
360
Suppose Scooter's Scooters is currently producing 100 scooters per month in its only factory. Its short-run average total cost is $
per scooter.
Suppose Scooter's Scooters is expecting to produce 100 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
long-run average total cost (LRATC) curve for Scooter's Scooters using the blue points (circle symbol).
Transcribed Image Text: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.) Average Total Cost (Dollars per scooter) Number of Factories Q = 100 Q = 200 Q = 300 Q = 400 Q = 500 Q = 600 1 360 200 160 240 400 720 2 540 300 160 160 300 540 3 720 400 240 160 200 360 Suppose Scooter's Scooters is currently producing 100 scooters per month in its only factory. Its short-run average total cost is $ per scooter. Suppose Scooter's Scooters is expecting to produce 100 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 long-run average total cost (LRATC) curve for Scooter's Scooters using the blue points (circle symbol).
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