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Back to Assignment Attempts 1 1 Keep the Highest 1/4 11. 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.) Average Total Cost (Dollars per bike) Number of Factories Q = 100 Q = 200 Q = 300 Q = 400 Q = 500 Q = 600 1 440 320 240 320 480 720 2 580 400 240 240 400 580 3 720 480 320 240 320 440 Suppose Ike's Bikes is currently producing 500 bikes per month in its only factory. Its short-run average total cost is $ per bike. 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 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 (SRATC); use the purple points (diamond symbol) to plot its short-run average total cost if it operates two factories (SRATC); and use the orange points (square symbol) to plot its short-run average total cost if it operates three factories (SRATC). 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. AVERAGE TOTAL COST (Dollars per bike) 800 720 640 A SRATC 560 SRATC 480 400 320 240 160 BO 0 0 100 200 300 400 500 600 700 QUANTITY OF OUTPUT (Bikes) SRATC -O LRATC In the long run, over which range of output levels does Ike's Bikes experience economies of scale? Fewer than 300 bikes per month Between 300 and 400 bikes per month More than 400 bikes per month Gradle It Now Saue & Continua

Back to Assignment Attempts 1 1 Keep the Highest 1/4 11. 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.) Average Total Cost (Dollars per bike) Number of Factories Q = 100 Q = 200 Q = 300 Q = 400 Q = 500 Q = 600 1 440 320 240 320 480 720 2 580 400 240 240 400 580 3 720 480 320 240 320 440 Suppose Ike's Bikes is currently producing 500 bikes per month in its only factory. Its short-run average total cost is $ per bike. 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 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 (SRATC); use the purple points (diamond symbol) to plot its short-run average total cost if it operates two factories (SRATC); and use the orange points (square symbol) to plot its short-run average total cost if it operates three factories (SRATC). 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. AVERAGE TOTAL COST (Dollars per bike) 800 720 640 A SRATC 560 SRATC 480 400 320 240 160 BO 0 0 100 200 300 400 500 600 700 QUANTITY OF OUTPUT (Bikes) SRATC -O LRATC In the long run, over which range of output levels does Ike's Bikes experience economies of scale? Fewer than 300 bikes per month Between 300 and 400 bikes per month More than 400 bikes per month Gradle It Now Saue & Continua

Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter4: Extent (how Much) Decisions
Section: Chapter Questions
Problem 3MC
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Back to Assignment Attempts 1 1 Keep the Highest 1/4 11. 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.) Average Total Cost (Dollars per bike) Number of Factories Q = 100 Q = 200 Q = 300 Q = 400 Q = 500 Q = 600 1 440 320 240 320 480 720 2 580 400 240 240 400 580 3 720 480 320 240 320 440 Suppose Ike's Bikes is currently producing 500 bikes per month in its only factory. Its short-run average total cost is $ per bike. 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 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 (SRATC); use the purple points (diamond symbol) to plot its short-run average total cost if it operates two factories (SRATC); and use the orange points (square symbol) to plot its short-run average total cost if it operates three factories (SRATC). 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. AVERAGE TOTAL COST (Dollars per bike) 800 720 640 A SRATC 560 SRATC 480 400 320 240 160 BO 0 0 100 200 300 400 500 600 700 QUANTITY OF OUTPUT (Bikes) SRATC -O LRATC In the long run, over which range of output levels does Ike's Bikes experience economies of scale? Fewer than 300 bikes per month Between 300 and 400 bikes per month More than 400 bikes per month Gradle It Now Saue & Continua
Transcribed Image Text:Back to Assignment Attempts 1 1 Keep the Highest 1/4 11. 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.) Average Total Cost (Dollars per bike) Number of Factories Q = 100 Q = 200 Q = 300 Q = 400 Q = 500 Q = 600 1 440 320 240 320 480 720 2 580 400 240 240 400 580 3 720 480 320 240 320 440 Suppose Ike's Bikes is currently producing 500 bikes per month in its only factory. Its short-run average total cost is $ per bike. 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 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 (SRATC); use the purple points (diamond symbol) to plot its short-run average total cost if it operates two factories (SRATC); and use the orange points (square symbol) to plot its short-run average total cost if it operates three factories (SRATC). 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. AVERAGE TOTAL COST (Dollars per bike) 800 720 640 A SRATC 560 SRATC 480 400 320 240 160 BO 0 0 100 200 300 400 500 600 700 QUANTITY OF OUTPUT (Bikes) SRATC -O LRATC In the long run, over which range of output levels does Ike's Bikes experience economies of scale? Fewer than 300 bikes per month Between 300 and 400 bikes per month More than 400 bikes per month Gradle It Now Saue & Continua
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