Jones Production Started Business with a Small Scale Plant BOver What Range of Total Product (Output)did Jones Production Experience

question 210

Essay

Jones Production started business with a small scale plant.Fortunately for Smith,the owner of Jones Production,the business grew rapidly.The table below gives the total costs and the associated output for each year.
a.Complete the table by finding the average cost for each scale.
$$\begin{array} { c c c c } \text { Year } & \text { Total output } & \begin{array} { l } \text { Total cost } \\\text { (dollars) }\end{array} & \begin{array} { c } \text { Average cost } \\\text { (dollars) }\end{array} \\\hline 1 & 100 & 1,000 & - \\2 & 240 & 2,000 & - \\3 & 500 & 4,000 & - \\4 & 1,000 & 8,000 & - \\5 & 1,800 & 16,000 & - \\6 & 2,500 & 32,000 & - \\\hline\end{array}$$
b.Over what range of total product (output)did Jones Production experience economies of scale,constant returns to scale,and diseconomies of scale?

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Definitions:

Purchased Lots

Refers to parcels or quantities of goods acquired by a company, often used in reference to real estate or bulk purchases of inventory.

Relevant Cost

Costs that will be affected by a decision and will have an impact on the future.

Variable Production Cost

Charges that fluctuate in line with production levels, such as direct labor and materials used.

Split-off

A point in the production process where multiple products are derived from a common input, and separate paths of further processing or sale are identified.