3. Costs in the short run versus in the long run Ike's Bikes is a major manufacturer of bicydes. Currently, the company produces bikes using only one factory. Howe production to two or even three factories. The following table shows the company's short-run average total cost (SRA of production if it uses one, two, or three factories. (Note: Q equals the total quantity of bikes produced by all factor Average Total Cost (Dollars per bike) Number of Factories Q = 25 Q = 50 Q = 75 Q = 100 Q = 125 Q = 150 %3D 1 440 320 240 320 480 720 580 400 240 240 400 580 720 480 320 240 320 440 Suppose Ike's Bikes is currently producing 125 bikes per month in its only factory. Its short-run average total cost is S Suppose Ike's Bikes is expecting to produce 125 bikes per month for several years. In this case, in the long run, it woul using On the following graph, plot the three SRATC curves for Ike's Bikes from the previous table. Specifically, use the green E its SRATC curve if it operates one factory (SRATC1); use the purple points (diamond symbol) to plot its SRATC curve ifA SRATCa- and use the orange noints (saurare symbo/) to plot its SRATC CUrve if it anerates three factories (SRATC) 2. 3.

3. Costs in the short run versus in the long run Ike's Bikes is a major manufacturer of bicydes. Currently, the company produces bikes using only one factory. Howe production to two or even three factories. The following table shows the company's short-run average total cost (SRA of production if it uses one, two, or three factories. (Note: Q equals the total quantity of bikes produced by all factor Average Total Cost (Dollars per bike) Number of Factories Q = 25 Q = 50 Q = 75 Q = 100 Q = 125 Q = 150 %3D 1 440 320 240 320 480 720 580 400 240 240 400 580 720 480 320 240 320 440 Suppose Ike's Bikes is currently producing 125 bikes per month in its only factory. Its short-run average total cost is S Suppose Ike's Bikes is expecting to produce 125 bikes per month for several years. In this case, in the long run, it woul using On the following graph, plot the three SRATC curves for Ike's Bikes from the previous table. Specifically, use the green E its SRATC curve if it operates one factory (SRATC1); use the purple points (diamond symbol) to plot its SRATC curve ifA SRATCa- and use the orange noints (saurare symbo/) to plot its SRATC CUrve if it anerates three factories (SRATC) 2. 3.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter9: Production Functions

Section: Chapter Questions

Problem 9.1P

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