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Question: 5 costs in the short run versus in the long...

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5. Costs in the short run versus in the long run Ikes Bikes is a major manufacturer of bicycles. Currently,the company produces bikes using only one factory. However, it is considering expanding production to twoor ven three factories. The following table shows the companys short-run average total cost (SRATC) each month for various evels of production if it uses one, two, ar three factories. Note: Q quals the total quantity of bikes produced by a factories.) Average Total Cost Dolars per bike) Number of Factories 100 200300400 500G00 540 160 160 720 240 160 360 Suppose Ikes B kes iscurrently producing 600b kes per month in its anly factory. Its short-run average total cost s per bike. Suppose Ikes B kes 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 On the fowowing graph, plot the three SRATC curves for ikes Eikes from the previous table. Specificaly, use the green paints (triangle symbol) to plat ts SRATC curve it it operates one factory(SRATCUse the purpie points (diamond symbal) to plot its SRATC curve if it operates two factories SRATC^. and use the orange points (square symbal) to plot its SRATC curve if it operates three factories(SRAIC.J) Finally, plot the long-rwn average total cost (LRATC) curve for Ikes Bikes using the ue points (chcle symbo. Note: Plat your paints in the order in which you would like them connected. Line segments will connect the points automatically. SRATC SRATC CUANTITY OF OUTPUT (Bkes) In the following tabie, indicate whether the long-run average cost curve exhibits economies of scale, constant returns to scale, or scale far each range of bike production. Fewer than 300 bikes per month Between 300 and 400 bikes per month More than 400 bikes per month

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