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The variety of Riverside Ranger logo T-shirts includes 12 different designs. Setup between designs takes one hour (and $21,000), and, after setting up, you can produce 1,000 units of a particular design per hour (at a cost of $6,000).
Assume QQ denotes the quantity produced of a particular design.
Which of the following best represents the average cost function for producing any single design?
1)AC=$21,000+$6
2)AC=$21,000+$6/Q
3)AC=$21,000/Q+6/Q
4)AC=$21,000+$6000
Based on this information, production in any one single design either exhibits or does not exhibit economies of scale?
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