### 5. Costs in the Short Run Versus in the Long RunIke’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 = 25 | Q = 50 | Q = 75 | Q = 100 | Q = 125 | Q=150 || 1 | 130 | 100 | 80 | 100 | 140 | 200 || 2 | 165 | 120 | 80 | 80 | 120 | 165 || 3 | 200 | 140 | 100 | 80 | 100 | 130 |Suppose Ike’s Bikes is currently producing 50 bikes per month in its only factory. Its short-run average total cost is __$100__ per bike.Suppose Ike’s Bikes is expecting to produce 50 bikes per month for several years. In this case, in the long run, it would choose to produce bikes using __one factory__.#### Graph InstructionsOn the following graph, plot the three SRATC curves for Ike’s Bikes from the previous table. Specifically, 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); and 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).**Note:** Plot your points in the order in which you would like them connected. Line segments will connect the points automatically.---This section provides an in ### Cost Analysis and Output Levels#### Instructions for Data Plotting**Note:** Plot your points in the order in which you would like them connected. Line segments will connect the points automatically.#### Graphical Data RepresentationBelow is a graph that represents the relationship between the quantity of bikes produced (on the x-axis) and the average total cost (on the y-axis in dollars per bike). - The y-axis (Average Total Cost in Dollars per bike) ranges from 0 to 200.- The x-axis (Quantity in Bikes) ranges from 0 to 175.There are different Average Total Cost (ATC) curves represented as:- **SRATC₁ (Green triangle marking)**- **SRATC₂ (Purple diamond marking)**- **SRATC₃ (Orange square marking)**- **LRATC (Light blue circle marking)**#### Activity: Identifying Economies of ScaleExamine the long-run average cost (LRATC) curve and indicate whether it exhibits economies of scale, constant returns to scale, or diseconomies of scale for each range of bike production.**Range and Scale Identification Table:**| Range | Economies of Scale | Constant Returns to Scale | Diseconomies of Scale ||------------------------------------|--------------------|---------------------------|-----------------------|| Fewer than 75 bikes per month | ○ | ○ | ○ || Between 75 and 100 bikes per month | ○ | ○ | ○ || More than 100 bikes per month | ○ | ○ | ○ |Select the appropriate option for each range based on the behavior of the LRATC curve in the graph.Understanding the behavior of the cost curves is essential for determining the most efficient scale of production for minimizing costs in the long run.

Quantity SRATC1 SRATC2 SRATC3 LRATC 25 130 165 200 130 50 100 120 140…

Average Total Cost (Dollars per bike) Number of Factories Q = 25 Q = = 50 Q = 75 Q = 100 Q = 125 Q = 150 %3D 1 130 100 80 100 140 200 165 120 80 80 120 165 3 200 140 100 80 100 130 Suppose Ike's Bikes is currently producing 50 bikes per month in its only factory. Its short-run average total cost is $ per bike. Suppose Ike's Bikes is expecting to produce 50 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. Specifically, 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); and 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).

Average Total Cost (Dollars per bike) Number of Factories Q = 25 Q = = 50 Q = 75 Q = 100 Q = 125 Q = 150 %3D 1 130 100 80 100 140 200 165 120 80 80 120 165 3 200 140 100 80 100 130 Suppose Ike's Bikes is currently producing 50 bikes per month in its only factory. Its short-run average total cost is $ per bike. Suppose Ike's Bikes is expecting to produce 50 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. Specifically, 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); and 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).

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Answer the question on the basis of the following cost data. Average Fixed Average Variable Output Cost Cost 1 $ 50.00 $ 100.00 2 25.00 80.00 3 16.67 66.67 4 12.50 65.00 5:35 5 10.00 68.00 6 8.37 73.33 7 7.14 80.00 8 6.25 87.50 The marginal cost of the sixth unit of output is Multiple Choice О $440.00. $8.37.
The table shows three short-run cost schedules for three plants of different sizes that a firm might build in the long run. Plant 1 Plant 2 Plant 3 Output ATC Output ATC Output ATC 10 $ 10 10 $ 15 10 $ 20 20 9 20 10 20 15 30 8 30 7 30 10 40 9 40 10 40 8 50 10 50 14 50 9 What is the long-run average cost of producing 10 units of output? Multiple Choice $10 $15 $20 $45
Give typing answer with explanation and conclusion
Explain why this statement is true or false: "If the labor cost per table is $20 and the material cost per table is $30, the short run average cost per table is $50."
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…
Yummy Gummies, Inc. makes boxes of individually packaged gummies. The company has a cost function given by C(x) dollars when x boxes of Yummy Gummies are made. If C '(100) = $3.50 per box, which of the following can we conclude from this information? %3D O The approximate cost of making the 100" box of Yummy Gummies is $3.50. O The exact cost of making the 99h box of Yummy Gummies is $3.50. The approximate cost of making the 101“ box of Yummy Gummies is $3.50. O The approximate cost of making the 99 box of Yummy Gummies is $3.50. O The exact cost of making the 101st box of Yummy Gummies is $3.50.
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…
Please make it 100% correct before submitting the answer, thanks!
Give typing answer with explanation and conclusion
Refer to the figure on the right. Suppose the output of a large aluminum firm drops from 2 million pounds to 0.5 million pounds per year. The long-run average cost of producing aluminum will go from $ to $. (Enter your responses rounded to the nearest penny.) Cost per pound $2.80 2.10 1.60 b 0.50 1.00 1.50 2.00 2.50 Million of pounds of Aluminum per year LA