### Understanding the Production Costs at Ike's BikesIke’s Bikes is a major manufacturer of bicycles. Currently, the company produces bikes using only one factory. However, it is considering expanding production to two or even three factories. The following table shows the company’s short-run average total cost (SRATC) each month for various levels of production if it uses one, two, or three factories. (*Note: Q equals the total quantity of bikes produced by all factories.*)#### Average Total Cost (Dollars per bike)| Number of Factories | Q = 100 | Q = 200 | Q = 300 | Q = 400 | Q = 500 | Q = 600 ||---------------------|--------|--------|--------|--------|--------|--------|| 1 | 440 | 280 | 240 | 240 | 480 | 800 || 2 | 620 | 380 | 240 | 240 | 380 | 620 || 3 | 800 | 480 | 320 | 240 | 280 | 440 |Suppose Ike’s Bikes is currently producing 100 bikes per month in its only factory. Its short-run average total cost is **$440 per bike**.Suppose Ike’s Bikes is expecting to produce 100 bikes per month for several years. In this case, in the long run, it would choose to produce bikes using **one factory**.### Graphical RepresentationOn the following graph, plot the three SRATC curves for Ike’s Bikes from the previous table.- Use the **green points (triangle symbol)** to plot its SRATC curve if it operates one factory (SRATC₁)- Use the **purple points (diamond symbol)** to plot its SRATC curve if it operates two factories (SRATC₂)- Use the **orange points (square symbol)** to plot its SRATC curve if it operates three factories (SRATC₃)Finally, plot the long-run average total cost (LRATC) curve for Ike’s Bikes using the **blue points (circle symbol)**.---Illustrate the costs and production strategies effectively to ensure optimal long-term planning and cost-efficiency in operations.*(Note: The provided image contains detailed numerical data which can be used to create accurate graphical representations for **Homework (Ch 13)****Graph Analysis**The provided graph plots the Average Total Cost (ATC) in dollars per bike against the Quantity of bikes produced. - **X-axis:** Quantity of Bikes (from 0 to 700 bikes)- **Y-axis:** Average Total Cost in dollars per bike (from $0 to $640)The graph shows four curves:1. **SRATC1** (purple curve)2. **SRATC2** (orange curve)3. **SRATC3** (green curve)4. **LRATC** (blue curve)The Short-Run Average Total Cost (SRATC) curves vary for different production scales, and the Long-Run Average Total Cost (LRATC) curve represents the minimum average cost for different quantities of production in the long run.**Table Instructions**In the following table, indicate whether the long-run average cost curve exhibits economies of scale, constant returns to scale, or diseconomies of scale for each range of bike production.| Range | Economies of Scale | Constant Returns to Scale | Diseconomies of Scale ||------------------------------------|--------------------|---------------------------|------------------------|| Fewer than 300 bikes per month | (?) | (?) | (?) || Between 300 and 400 bikes per month| (?) | (?) | (?) || More than 400 bikes per month | (?) | (?) | (?) |**Note:** Please fill in each row with the appropriate selection based on the analysis of the LRATC curve.

Short-run is such a period in which at least one of the factors of production is fixed whereas the…

AVERAGE TOTAL COST (Dollars per bike) 640 560 480 400 320 240 160 80 0 0 100 200 300 400 QUANTITY (Bikes) 500 Range Fewer than 300 bikes per month Between 300 and 400 bikes per month More than 400 bikes per month 600 700 SRATC₁ O O SRATC₂ SRATC3 In the following table, indicate whether the long-run average cost curve exhibits economies of scale, constant returns to scale, or diseconomies of scale for each range of bike production. LRATC Economies of Scale Constant Returns to Scale Diseconomies of Scale ο ο ο

AVERAGE TOTAL COST (Dollars per bike) 640 560 480 400 320 240 160 80 0 0 100 200 300 400 QUANTITY (Bikes) 500 Range Fewer than 300 bikes per month Between 300 and 400 bikes per month More than 400 bikes per month 600 700 SRATC₁ O O SRATC₂ SRATC3 In the following table, indicate whether the long-run average cost curve exhibits economies of scale, constant returns to scale, or diseconomies of scale for each range of bike production. LRATC Economies of Scale Constant Returns to Scale Diseconomies of Scale ο ο ο

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter4: Extent (how Much) Decisions

Section: Chapter Questions

Problem 3MC

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Ike's Bikes is a major manufacturer of bicycles. Currently, the company produces bikes using only one factory. However, it is considering expanding production to two or even three factories. The following table shows the company's short-run average total cost each month for various levels of production if it uses one, two, or three factories. (Note: Q equals the total quantity of bikes produced by all factories.) Average Total Cost (Dollars per bike) Number of Factories O = 100 Q = 200 Q = 300 Q = 400 Q = 500 O = 600 1 520 400 320 400 560 800 660 480 320 320 480 660 800 560 400 320 400 520 Suppose Ike's Bikes is currently producing 500 bikes per month in its only factory. Its short-run average total cost is $ per bike. Suppose Ike's Bikes is expecting to produce 500 bikes per month for several years. In this case, in the long run, it would choose to produce bikes using On the following graph, plot the three short-run average total cost curves (SRATC) for Ike's Bikes from the previous…
29979995799&elSBN=97803571336068&snapshotld%3D2200166&id%3D1061547992&takeld 560 480 SRATC, 400 320 SRATC 240 160 LRATC 80 + + 100 200 300 400 500 600 700 QUANTITY (Bikes) In the following table, indicate whether the long-run average cost curve exhibits economies of scale, constant returns to scale, or diseconomies of scale for each range of bike production. Range Economies of Scale Constant Returns to Scale Diseconomies of Scale More than 400 bikes per month Fewer than 300 bikes per month Between 300 and 400 bikes per month M acer AVERAGE TOTAL COST (Dollars per b
Ike's Bikes is a major manufacturer of bicycles. Currently, the company produces bikes using only one factory. However, it is considering expanding production to two or even three factories. The following table shows the company's short-run average total cost (SRATC) each month for various levels of production if it uses one, two, or three factories. (Note: Q equals the total quantity of bikes produced by all factories.) Average Total Cost (Dollars per bike) Number of Factories Q = 75 Q = 150 Q = 225 Q = 300 Q = 375 Q = 450 130 100 80 100 140 200 165 120 80 80 120 165 3 200 140 100 80 100 130 Suppose Ike's Bikes is currently producing 375 bikes per month in its only factory. Its short-run average total cost is S per bike. Suppose Ike's Bikes is expecting to produce 375 bikes per month for several years. In this case, in the long run, it would choose to produce bikes using
Ike's Bikes is a major manufacturer of bicycles. Currently, the company produces bikes using only one factory. However, it is considering expanding production to two or even three factories. The following table shows the company's short-run average total cost (SRATC) each month for various levels of production if it uses one, two, or three factories. (Note: Q equals the total quantity of bikes produced by all factories.) Average Total Cost (Dollars per bike) Number of Factories Q = 100 Q = 200 Q = 300 Q = 400 Q = = 500 Q = 600 360 200 160 240 400 720 540 300 160 160 300 540 720 400 240 160 200 360 Suppose Ike's Bikes is currently producing 500 bikes per month in its only factory. Its short-run average total cost is $400 per bike. Suppose Ike's Bikes is expecting to produce 500 bikes per month for several years. In this case, in the long run, it would choose to produce bikes using three factories ▼ On the following graph, plot the three SRATC curves for Ike's Bikes from the previous…
Ike's Bikes is a major manufacturer of bicycles. Currently, the company produces bikes using only one factory. However, it is considering expanding production to two or even three factories. The following table shows the company's short-run average total cost (SRATC) each month for various levels of production if it uses one, two, or three factories. (Note: Q equals the total quantity of bikes produced by all factories.) Average Total Cost (Dollars per bike) Number of Factories Q = 100 Q = 200 Q = 300 Q = 400 Q = 500 Q = 600 1 360 200 160 240 400 720 2 540 300 160 160 300 540 3 720 400 240 160 200 360 Suppose Ike's Bikes is currently producing 500 bikes per month in its only factory. Its short-run average total cost is $ per bike. Suppose Ike's Bikes is expecting to produce 500 bikes per month for several years. In this case, in the long run, it would choose to produce bikes using three factories v On the following graph, plot the three SRATC curves for Ike's Bikes from the previous…
Ike's Bikes is a major manufacturer of bicycles. Currently, the company produces bikes using only one factory. However, it is considering expanding production to two or even three factories. The following table shows the company's short-run average total cost (SRATC) each month for various levels of production if it uses one, two, or three factories. (Note: Q equals the total quantity of bikes produced by all factories.) Average Total Cost (Dollars per bike) Number of Factories Q = 100 Q = 200 Q = 300 Q = 400 Q = 500 Q = 600 %3D 1 360 200 160 240 400 720 540 300 160 160 300 540 3 720 400 240 160 200 360 Suppose Ike's Bikes is currently producing 100 bikes per month in its only factory. Its short-run average total cost is $ per bike. Suppose Ike's Bikes is expecting to produce 100 bikes per month for several years. In this case, in the long run, it would choose to produce bikes using On the following graph, plot the three SRATC curves for Ike's Bikes from the previous table.…
Back to Assignment Attempts 1 1 Keep the Highest 1/4 11. Costs in the short run versus in the long run Ike's Bikes is a major manufacturer of bicycles. Currently, the company produces bikes using only one factory. However, it is considering expanding production to two or even three factories. The following table shows the company's short-run average total cost each month for various levels of production if it uses one, two, or three factories. (Note: Q equals the total quantity of bikes produced by all factories.) Average Total Cost (Dollars per bike) Number of Factories Q = 100 Q = 200 Q = 300 Q = 400 Q = 500 Q = 600 1 440 320 240 320 480 720 2 580 400 240 240 400 580 3 720 480 320 240 320 440 Suppose Ike's Bikes is currently producing 500 bikes per month in its only factory. Its short-run average total cost is $ per bike. Suppose Ike's Bikes is expecting to produce 500 bikes per month for several years. In this case, in the long run, it would choose to produce bikes using On the…
Back to Assignment Attempts 1 Keep the Highest 1/4 11. Costs in the short run versus in the long run Ike's Bikes is a major manufacturer of bicycles. Currently, the company produces bikes using only one factory. However, it is considering expanding production to two or even three factories. The following table shows the company's short-run average total cost each month for various levels of production if it uses one, two, or three factories. (Note: Q equals the total quantity of bikes produced by all factories.) Average Total Cost (Dollars per bike) Number of Factories Q=100 Q = 200 Q = 300 Q = 400 Q=500 Q = 600 1 440 320 240 320 480 720 2 580 400 240 240 400 580 3 720 480 320 240 320 440 Suppose Ike's Bikes is currently producing 500 bikes per month in its only factory. Its short-run average total cost is $ per bike. Suppose Ike's Bikes is expecting to produce 500 bikes per month for several years. In this case, in the long run, it would choose to produce bikes using On the following…
7. Costs in the short run versus in the long run Ike's Bikes is a major manufacturer of bicycles. Currently, the company produces bikes using only one factory. However, it is considering expanding production to two or even three factories. The following table shows the company's short-run average total cost each month for various levels of production if it uses one, two, or three factories. (Note: Q equals the total quantity of bikes produced by all factories.) Number of Factories Q = 100 440 580 720 1 2 3 Q = 200 320 400 480 Average Total Cost (Dollars per bike) Q = 300 Q = 400 240 320 240 240 320 240 Q = 500 480 400 320 Q = 600 720 580 440 Suppose Ike's Bikes is currently producing 600 bikes per month in its only factory. Its short-run average total cost is $ per bike. Suppose Ike's Bikes is expecting to produce 600 bikes per month for several years. In this case, in the long run, it would choose to produce bikes using On the following graph, plot the three short-run average total…
If you were a taxi driver, the daily revenue and cost are as the following: Revenue: $250 Variable cost (gas, your labor…): $190 Mortgage payment for car: $70 License Fee: $30 For profit maximization, will you operate your taxi business today? What is the minimum daily revenue to keep the operation in the short run? What is the minimum daily revenue to keep the operation in the long run? Please show calculation formula and/or equation.
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Ike’s Bikes is a major manufacturer of bicycles. Currently, the company produces bikes using only one factory. However, it is considering expanding production to two or even three factories. The following table shows the company’s short-run average total cost (SRATC) each month for various levels of production if it uses one, two, or three factories. (Note: Q equals the total quantity of bikes produced by all factories.) Number of Factories Average Total Cost (Dollars per bike) Q = 100 Q = 200 Q = 300 Q = 400 Q = 500 Q = 600 1 360 200 160 240 400 720 2 540 300 160 160 300 540 3 720 400 240 160 200 360 Suppose Ike’s Bikes is currently producing 600 bikes per month in its only factory. Its short-run average total cost is per bike. Suppose Ike’s Bikes is expecting to produce 600 bikes per month for several years. In this case, in the long run, it would choose to produce bikes usingone factory . On the following graph, plot…