Jackie’s pays $100 a day for each canoe it rents and $50 a day for each canoe operator it hires.
a. Graph the ATC curves for Plant 1 and Plant 2.
b. On your graph in a, plot the ATC curves for Plant 3 and Plant 4.
c. On Jackie’s LRAC curve, what is the average cost of producing 40, 75, and 85 rides a week?
d. What is Jackie’s minimum efficient scale?
e. Explain how Jackie’s uses its LRAC curve to decide how many canoes to rent.
f. Does Jackie’s production function feature economies of scale or diseconomies of scale?
