Ike'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 each month for various levels ofproduction if it uses one, two, or three factories. (Note: Q equals the total quantity of bikes produced by all factories.)Number of Factories Q = 100 Q = 200520400660480800560123Average Total Cost(Dollars per bike)Q = 300Q = 400320400320320400320Q = 500560480400Q = 600800660520Suppose 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 bikesusingOn the following graph, plot the three short-run average total cost curves (SRATC) for Ike's Bikes from the previous table. Specifically, use thegreen points (triangle symbol) to plot its short-run average total cost if it operates one factory (SRATC₁); use the purple points (diamond symbol) toplot its short-run average total cost if it operates two factories (SRATC₂); and use the orange points (square symbol) to plot its short-run averagetotal cost if it operates three factories (SRATC3). Finally, plot the long-run average total cost (LRATC) for Ike's Bikes using the blue points (circlesymbol). 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)8007206405604804003202401608000100200300400500QUANTITY OF OUTPUT (Bikes)600More than 400 bikes per monthFewer than 300 bikes per monthBetween 300 and 400 bikes per month700SRATC,SRATC₂SRATC3LRATCIn the long run, over which range of output levels does Ike's Bikes experience diseconomies of scale?

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.)

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.)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Solve the attachment.
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