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Suppose Argyle Sachs Has to Choose Between Building a Smaller

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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.
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 ATC<sub>1</sub>, and the relationship between costs and output for the larger factory is represented by the curve ATC<sub>2</sub>. a. If Argyle expects to produce 3600 sweaters per month, should he build a smaller factory or a larger factory? Briefly explain. b. If Argyle expects to produce 5000 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 6500 sweaters per week, why isn't it also lower when Argyle produces 4000 sweaters per week? a. If Argyle expects to produce 3600 sweaters per month, should he build a smaller factory or a larger factory? Briefly explain.
b. If Argyle expects to produce 5000 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 6500 sweaters per week, why isn't it also lower when Argyle produces 4000 sweaters per week?

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a. Argyle's costs will be lower with a s...

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