Average Total Cost ($ per tablet) Number of Factories Q=100 Q=200 Q=300 Q=400 Q=500 Q=600 400 300 200 240 300 720 540 350 180 160 250 540 720 400 170 160 200 360 The company, Peleton is a major manufacturer of indoor exercise trainers. Currently the company produces trainers using only one factory. However it is considering expanding production to two or even three factories. The table above shows the company's short-run average total cost (SRATC) each month for various levels of production if it uses one, two, or three factories. (Note: Q equals the total quantity of trainers produced by all factories.) Refer to the table. Which of the following is NOT true about the long- run averáge cost curve of Peleton's trainers? Peleton experiences diseconomies of scale at any quantity over 400 trainers. The long-run average total cost of production per trainer will be $170 when 300 trainers are produced in the long run. Peleton experiences diseconomies of scale at any quantity less than 400 trainers. The long-run average total cost of production per trainer will be $160 when 400 trainers are produced in the long run.

Average Total Cost ($ per tablet) Number of Factories Q=100 Q=200 Q=300 Q=400 Q=500 Q=600 400 300 200 240 300 720 540 350 180 160 250 540 720 400 170 160 200 360 The company, Peleton is a major manufacturer of indoor exercise trainers. Currently the company produces trainers using only one factory. However it is considering expanding production to two or even three factories. The table above shows the company's short-run average total cost (SRATC) each month for various levels of production if it uses one, two, or three factories. (Note: Q equals the total quantity of trainers produced by all factories.) Refer to the table. Which of the following is NOT true about the long- run averáge cost curve of Peleton's trainers? Peleton experiences diseconomies of scale at any quantity over 400 trainers. The long-run average total cost of production per trainer will be $170 when 300 trainers are produced in the long run. Peleton experiences diseconomies of scale at any quantity less than 400 trainers. The long-run average total cost of production per trainer will be $160 when 400 trainers are produced in the long run.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter8: Cost Analysis

Section: Chapter Questions

Problem 6E

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Question

Average Total Cost ($ per tablet)
Q=400
Number of Factories
Q=100
Q=200
Q=300
Q=500
Q=600
1
400
300
200
240
300
720
540
350
180
160
250
540
3
720
400
170
160
200
360
The company, Peleton is a major manufacturer of indoor exercise trainers. Currently the company produces trainers using only one factory. However it is considering
expanding production to two or even three factories. The table above shows the company's short-run average total cost (SRATC) each month for various levels of production if
it uses one, two, or three factories. (Note: Q equals the total quantity of trainers produced by all factories.) Refer to the table. Which of the following is NOT true about the long-
run averáge cost curve of Peleton's trainers?
Peleton experiences diseconomies of scale at any quantity over 400 trainers.
The long-run average total cost of production per trainer will be $170 when 300 trainers are produced in the long run.
Peleton experiences diseconomies of scale at any quantity less than 400 trainers.
The long-run average total cost of production per trainer will be $160 when 400 trainers are produced in the long run.
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