On the following graph, plot the three short-run average total cost curves (SRATC) for Ike's Bikes from the previous table. Specifically, use thegreen points (triangle symbol) to plot its short-run average total cost if it operates one factory (SRATC₁); use the purple points (diamond symbol) toplot its short-run average total cost if it operates two factories (SRATC₂); and use the orange points (square symbol) to plot its short-run averagetotal cost if it operates three factories (SRATC3). Finally, plot the long-run average cost curve (LRAC) for Ike's Bikes using the blue points (circlesymbol).Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically.COST PER BIKE (Dollars)8007206405604804003202401608000100200300400500QUANTITY OF OUTPUT (Bikes)O Fewer than 300 bikes per monthMore than 400 bikes per month600Between 300 and 400 bikes per month700SRATC,SRATC₂2SRATCIn the long run, over which range of output levels does Ike's Bikes experience constant returns to scale?LRAC Ike's Bikes is a major manufacturer of bicycles. Currently, the company produces bikes using only one factory. However, it is considering expandingproduction to two or even three factories. The following table shows the company's short-run average total cost each month for various levels ofproduction if it uses one, two, or three factories. (Note: Qequals the total quantity of bikes produced by all factories.)Number of Factories Q = 100440123580720Q = 200320400480Average Total Cost(Dollars per bike)Q = 300 Q = 400240320240320240240Q= 500480400320Q = 600720580440Suppose Ike's Bikes is currently producing 600 bikes per month in its only factory. Its short-run average total cost isper 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 bikesusing

Diseconomies of scale is when the the increase in production leads to increase in average total…

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: Qequals the total quantity of bikes produced by all factories.) Number of Factories Q = 100 440 1 2 3 580 720 Q = 200 320 400 480 Average Total Cost (Dollars per bike) Q = 300 Q = 400 240 320 240 320 240 240 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

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: Qequals the total quantity of bikes produced by all factories.) Number of Factories Q = 100 440 1 2 3 580 720 Q = 200 320 400 480 Average Total Cost (Dollars per bike) Q = 300 Q = 400 240 320 240 320 240 240 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

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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.) NOTE: the options for the blank question is this 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 _______ (once factory OR two factory OR three factory)
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