See attached pictures for the question. 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 plotits 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-runaverage 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.800720SRATC,640560480SRATC2400320SRATC3240160LRATC80100200300400500600700QUANTITY (Bikes)In the following table, indicate whether the long-run average cost curve exhibits economies of scale, constant returns to scale, or diseconomies ofscale for each range of bike production.RangeEconomies of ScaleConstant Returns to ScaleDiseconomies of ScaleFewer than 300 bikes per monthBetween 300 and 400 bikes per monthMore than 400 bikes per monthAVERAGE TOTAL COST (Dollars per bike)O o o 3. 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 expandingproduction to two or even three factories. The following table shows the company's short-run average total cost (SRATC) each month for various levelsof 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 FactoriesQ = 100Q = 200О 3 300Q = 400Q = 500О — 600136020016024040072025403001601603005403720400240160200360Suppose Ike's Bikes is currently producing 100 bikes per month in its only factory. Its short-run average total cost isper 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 bikesusingone factoryOn theplot the three SRATC curves for Ike's Bikes from the previous table. Specifically, use the green points (triangle symbol) to plottwo factoriesits SRerates one factory (SRATC1); use the purple points (diamond symbol) to plot its SRATC curve if it operates two factories (SRA three factories orange points (square symbol) to plot its SRATC curve if it operates three factories (SRATC3). Finally, plot the long-runaverage totar cUST (LRATC) curve for Ike's Bikes using the blue points (circle symbol).

This can be described as the cost advantages that businesses can achieve by increasing production…

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 p 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.

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 p 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.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

See attached pictures for the question.

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).
Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically.
800
720
SRATC,
640
560
480
SRATC2
400
320
SRATC3
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
Fewer than 300 bikes per month
Between 300 and 400 bikes per month
More than 400 bikes per month
AVERAGE TOTAL COST (Dollars per bike)
O o o

3. 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 (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
О 3 300
Q = 400
Q = 500
О — 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 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
one factory
On the
plot the three SRATC curves for Ike's Bikes from the previous table. Specifically, use the green points (triangle symbol) to plot
two factories
its SR
erates one factory (SRATC1); use the purple points (diamond symbol) to plot its SRATC curve if it operates two factories (
SRA three factories orange points (square symbol) to plot its SRATC curve if it operates three factories (SRATC3). Finally, plot the long-run
average totar cUST (LRATC) curve for Ike's Bikes using the blue points (circle symbol).

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