The table below shows average cost data for three different-sized plants—1, 2, and 3—which are the only three sizes possible.Output100Plant 1$1815Plant 2$1411200300117400105001489Plant 3$101191011a. In what plant size is MES achieved?(Click to select)b. What is the economic capacity for plant 2?Economic capacity:c. What is the right-size plant to produce an output of 300?✓ (Click to select)Plant 1Plant 3Plant 2

Economic capacity is the output level corresponding to the minimum average cost of a plant. The…

The table below shows average cost data for three different-sized plants-1, 2, and 3-which are the only three sizes possible. Plant 1 $18 15 Plant 2 $14 11 11 7 Output 100 200 300 400 500 8 9 10 14 Plant 3 $10 11 9 10 11 a. In what plant size is MES achieved? (Click to select) b. What is the economic capacity for plant 2? Economic capacity: c. What is the right-size plant to produce an output of 300?

The table below shows average cost data for three different-sized plants-1, 2, and 3-which are the only three sizes possible. Plant 1 $18 15 Plant 2 $14 11 11 7 Output 100 200 300 400 500 8 9 10 14 Plant 3 $10 11 9 10 11 a. In what plant size is MES achieved? (Click to select) b. What is the economic capacity for plant 2? Economic capacity: c. What is the right-size plant to produce an output of 300?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

100%

The table below shows average cost data for three different-sized plants—1, 2, and 3—which are the only three sizes possible.
Output
100
Plant 1
$18
15
Plant 2
$14
11
200
300
11
7
400
10
500
14
8
9
Plant 3
$10
11
9
10
11
a. In what plant size is MES achieved?
(Click to select)
b. What is the economic capacity for plant 2?
Economic capacity:
c. What is the right-size plant to produce an output of 300?
✓ (Click to select)
Plant 1
Plant 3
Plant 2

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Step 1: Define economic capacity and minimum efficient scale of production:

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Step 2: Calculate MES:

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Step 3: Calculate economic capacity:

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Step 4: Calculate the right-plant size for 300 units of output:

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