The variety of Riverside Ranger logo T-shirts includes 12 different designs. Setup between designs takes one...

The variety of Riverside Ranger logo T-shirts includes 12 different designs. Setup between designs takes one hour (and $24,000), and, after setting up, you can produce 1,000 units of a particular design per hour (at a cost of $11,000). Note: Assume Q denotes the quantity produced of a particular design.

Which of the following best represents the average cost function for producing any single design?

AC=$24,000+$11

AC=$24,000Q+$11

AC=$24,000+$11,000

AC=$24,000+$11Q

Based on this information, production in any one single design (does, does not) economies of scale.

Expert Solution

We know fixed cost =24000

variable cost =11000 for 1000 units

average variable cost=11

Average cost=24000/Q+11

ans is B

yes economies of scale exist

Rahul Sunny answered 2 years ago

Dawes Designs buys T-shirts for clubs, teams, and other organizations. Dawes takes the

Dawes Designs buys T-shirts for clubs, teams, and other organizations. Dawes takes the shirts and adds the organization's logo. Because of the uncertainty in the timing of the sales and to avoid stock outages, Dawes tries to maintain an inventory of shirts equal to two months of sales. The shirts cost $12.50 each and must be paid for in cash. On June 30 of the current year, the company expects to have 16,200 shirts in stock. Sales estimates, based on...

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The variety of Riverside Ranger logo T-shirts includes 12 different designs. Setup between designs takes one...

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