Suppose Argyle Sachs Has to Choose Between Building a Smaller

question 6

Essay

Suppose Argyle Sachs has to choose between building a smaller sweater factory and a larger sweater factory.In the following graph,the relationship between costs and output for the smaller factory is represented by the curve ATC₁,and the relationship between costs and output for the larger factory is represented by the curve ATC₂. a.If Argyle expects to produce 3 600 sweaters per month,should he build a smaller factory or a larger factory? Briefly explain.
b.If Argyle expects to produce 5 000 sweaters per month,should he build a smaller factory or a larger factory? Briefly explain.
c.If the average cost of producing sweaters is lower in the larger factory when Argyle produces 6 500 sweaters per week,why isn't it also lower when Argyle produces 4 000 sweaters per week?
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Definitions:

Trustworthy

Deserving of trust or confidence, reliable and dependable in character, actions, and intentions.

Equity

The concept of fairness or justice in situations, ensuring fair treatment and distribution of resources among individuals or groups.

Social Exchange

A theory that suggests human relationships are formed by the use of a subjective cost-benefit analysis and the comparison of alternatives.

Mere Exposure Effect

The psychological phenomenon by which people tend to develop a preference for things merely because they are familiar with them.