Suppose Argyle Sachs Has to Choose Between Building a Smaller

question 303

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:

Proportion to Work

Refers to the relative amount of effort or resources allocated towards work activities compared to other areas.

Social Comparison

The process of comparing oneself to others in order to evaluate or enhance one's own abilities, attitudes, and beliefs.

Equity Theory

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Locke and Latham

Scholars known for their goal-setting theory, emphasizing the importance of setting specific and challenging goals to enhance performance.