When the first automobiles were built in 1901, they were made by skilled workers using hand tools. Later, in 1913, Henry Ford introduced the moving assembly line, which lowered costs and speeded production. Over the years, the production line has become ever more mechanized, and today robots replace people in many tasks. The graph below shows the demand curve for cars in 1901. Suppose the least-possible cost of producing a car is $250 and that the efficient scale is 0.5 cars a day. Draw the average total cost curve in 1901. Label it ATC,. Price (dollars per car) Q 500 400+ 2 ATO 300- 200- 100- 04 n The graph below shows the demand curve for cars in 2020. Suppose the least-possible cost of producing a car is $10,000 and that the efficient scale is 200,000 cars a day. Draw the average total cost curve in 2020. Label it ATC₂. Price (dollars per car) 50,000 40,000+ 30,000 20,000 10,000+ 04 0 100 200 300 400 D 500 ** RO
When the first automobiles were built in 1901, they were made by skilled workers using hand tools. Later, in 1913, Henry Ford introduced the moving assembly line, which lowered costs and speeded production. Over the years, the production line has become ever more mechanized, and today robots replace people in many tasks. The graph below shows the demand curve for cars in 1901. Suppose the least-possible cost of producing a car is $250 and that the efficient scale is 0.5 cars a day. Draw the average total cost curve in 1901. Label it ATC,. Price (dollars per car) Q 500 400+ 2 ATO 300- 200- 100- 04 n The graph below shows the demand curve for cars in 2020. Suppose the least-possible cost of producing a car is $10,000 and that the efficient scale is 200,000 cars a day. Draw the average total cost curve in 2020. Label it ATC₂. Price (dollars per car) 50,000 40,000+ 30,000 20,000 10,000+ 04 0 100 200 300 400 D 500 ** RO
Chapter10: Cost Functions
Section: Chapter Questions
Problem 10.8P
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