3. Costs in the short run versus in the long run 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.) Number of Factories Q = 100 Q = 200 1 440 280 2 620 3 is 800 per scooter. 380 one factory 480 Average Total Cost (Dollars per scooter) Q = 300 Q = 400 240 320 240 320 240 240 Q = 500 480 380 Suppose Scooter's Scooters is currently producing 600 scooters per month in its only factory. Its short-run average total cost 280 Q = 600 800 620 440 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 one factory

3. Costs in the short run versus in the long run 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.) Number of Factories Q = 100 Q = 200 1 440 280 2 620 3 is 800 per scooter. 380 one factory 480 Average Total Cost (Dollars per scooter) Q = 300 Q = 400 240 320 240 320 240 240 Q = 500 480 380 Suppose Scooter's Scooters is currently producing 600 scooters per month in its only factory. Its short-run average total cost 280 Q = 600 800 620 440 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 one factory

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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