Question

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= 50 220 310 400 Q=100 140 190 240 Q=150 120 120 160 Q=200 160 120 120 Q=250 240 190 140 Q=300 400 310 220 Suppose Ike's Bikes is currently producing 300 bikes per month in its only factory. Its short-run average total cost is $ per bike Suppose Ike's Bikes is expecting to produce 300 bikes per month for several years. In this case, in the long run, it would choose to produce bikes using one factory On th ts SR SRAT three factories orange points (square symbol) to plot its SRATC curve if it operates three factories (SRATC3). Finally, plot the long-run avera plot the three SRATC curves for Ike's Bikes from the preus table. Specifically, use the green points (triangle symbol) to plot rates one factory (SRATC1); use the purple points (diamond symbol) to plot its SRATC curve if it operates two factories ( two factories TC) 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.

Answer 1