Answer Happy

℗ ? Back to Assignment Attempts Keep the Highest/4 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 1 2 Q=100 520 660 800 Q=200 400 480 560 Average Total Cost (Dollars per bike) Q=300 Q-400 320 400 320 320 400 320 Q = 500 560 480 400 Q=600 800 660 520 Suppose Ike's Bikes is currently producing 600 bikes per month in its only factory. Its short-run average total cost is s 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 per bike. On the following graph, plot the three short-run average total cost curves (SRATC) for Ike's Bikes from the previous table. Specifically, use the green points (triangle symbol) to plot its short-run average total cost if it operates one factory (SRATC1); use the purple points (diamond symbol) to plot its short-run average total cost if it operates two factories (SRATC2); and use the orange points (square symbol) to plot its short-run average total cost if it operates three factories (SRATCs). Finally, plot the long-run average total cost (LRATC) 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.

short-run average total cost if it operates two factories (SRATC₂); and use the orange points (square symbol) to plot its short-run a if it operates three factories (SRATC3). Finally, plot the long-run average total cost (LRATC) for Ike's Bikes using the blue points (C Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically. ? AVERAGE TOTAL COST (Dollars per bike) 800 720 640 560 480 400 320 240 160 80 0 100 200 300 400 500 QUANTITY OF OUTPUT (Bikes) 600 700 Fewer than 300 bikes per month Between 300 and 400 bikes per month More than 400 bikes per month SRATC, SRATC₂ 4 SRATC -O LRATC In the long run, over which range of output levels does Ike's Bikes experience constant average cost?