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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 Q = 100 1 360 2 540 3 720 Q = 200 200 300 400 Average Total Cost (Dollars per scooter) Q = 300 Q = 400 Q = 500 160 240 400 160 160 240 160 300 200 Q = 600 720 540 360 Suppose Scooter's Scooters is currently producing 600 scooters per month in its only factory. Its short-run average total cost is $ per scooter. Suppose Scooter's Scooters is expecting to produce 600 scooters per month for several years. In this case, in the long run, it would choose to produce scooters using

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 Q = 100 1 360 2 540 3 720 Q = 200 200 300 400 Average Total Cost (Dollars per scooter) Q = 300 Q = 400 Q = 500 160 240 400 160 160 240 160 300 200 Q = 600 720 540 360 Suppose Scooter's Scooters is currently producing 600 scooters per month in its only factory. Its short-run average total cost is $ per scooter. Suppose Scooter's Scooters is expecting to produce 600 scooters per month for several years. In this case, in the long run, it would choose to produce scooters using

Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter4: Extent (how Much) Decisions
Section: Chapter Questions
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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 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 Q = 100 1 360 2 3 540 720 Q = 200 200 300 400 Average Total Cost (Dollars per scooter) Q = 300 Q = 400 160 240 160 240 160 160 Q = 500 400 300 200 Q = 600 720 540 360 Suppose Scooter's Scooters is currently producing 600 scooters per month in its only factory. Its short-run average total cost is $ per scooter. Suppose Scooter's Scooters is expecting to produce 600 scooters per month for several years. In this case, in the long run, it would choose to produce scooters using
Transcribed Image Text: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 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 Q = 100 1 360 2 3 540 720 Q = 200 200 300 400 Average Total Cost (Dollars per scooter) Q = 300 Q = 400 160 240 160 240 160 160 Q = 500 400 300 200 Q = 600 720 540 360 Suppose Scooter's Scooters is currently producing 600 scooters per month in its only factory. Its short-run average total cost is $ per scooter. Suppose Scooter's Scooters is expecting to produce 600 scooters per month for several years. In this case, in the long run, it would choose to produce scooters using
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