Answer Happy

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: Qequals the total quantity of bikes produced by all factories.) Average Total Cost (Dollars per bike) Q = 225 Q = 300 80 Number of factories Q = 75 130 Q = 150 100 Q = 375 140 Q = 450 200 1 100 2 2 165 120 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 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 SRATC.); 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. > 200 180 160 SRATC 140 120 SRATC AVERAGE TOTALCOST (Dollars per bike) 100 80 SRATC 60 40 LRATC 20) 0 + n 775 150 225 375 450 525