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5. 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 (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.) Number of Factories 1 2 3 Q = 50 Q = 100 180 100 270 150 360 200 Average Total Cost (Dollars per bike) Q = 150 Q = 200 80 120 80 120 80 80 Q = 250 200 150 100 Q = 300 360 270 180 Suppose Ike's Bikes is currently producing 50 bikes per month in its only factory. Its short-run average total cost is $ per bike. Suppose Ike's Bikes is expecting to produce 50 bikes per month for several years. In this case, in the long run, it would choose to produce bikes using

5. 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 (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.) Number of Factories 1 2 3 Q = 50 Q = 100 180 100 270 150 360 200 Average Total Cost (Dollars per bike) Q = 150 Q = 200 80 120 80 120 80 80 Q = 250 200 150 100 Q = 300 360 270 180 Suppose Ike's Bikes is currently producing 50 bikes per month in its only factory. Its short-run average total cost is $ per bike. Suppose Ike's Bikes is expecting to produce 50 bikes per month for several years. In this case, in the long run, it would choose to produce bikes using

Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
8th Edition
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter14: Firms In Competitive Markets
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5. 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 (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.) Number of Factories Q = 50 1 180 2 270 3 360 Q = 100 100 150 200 Average Total Cost (Dollars per bike) Q = 150 Q = 200 80 120 80 120 80 80 Q = 250 200 150 100 Q = 300 360 270 180 Suppose Ike's Bikes is currently producing 50 bikes per month in its only factory. Its short-run average total cost is per bike. Suppose Ike's Bikes is expecting to produce 50 bikes per month for several years. In this case, in the long run, it would choose to produce bikes using
Transcribed Image Text:5. 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 (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.) Number of Factories Q = 50 1 180 2 270 3 360 Q = 100 100 150 200 Average Total Cost (Dollars per bike) Q = 150 Q = 200 80 120 80 120 80 80 Q = 250 200 150 100 Q = 300 360 270 180 Suppose Ike's Bikes is currently producing 50 bikes per month in its only factory. Its short-run average total cost is per bike. Suppose Ike's Bikes is expecting to produce 50 bikes per month for several years. In this case, in the long run, it would choose to produce bikes using
5. 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 (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 Q = 100 Q = 150 Q = 200 Q = 250 Q = 300 THRO 100 80 150 80 200 120 1 2 3 180 270 360 120 80 80 200 150 100 360 270 180 Suppose Ike's Bikes is currently producing 50 bikes per month in its only factory. Its short-run average total cost is per bike. Suppose Ike's Bikes is expecting to produce 50 bikes per month for several years. In this case, in the long run, it would choose to produce bikes using
Transcribed Image Text:5. 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 (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 Q = 100 Q = 150 Q = 200 Q = 250 Q = 300 THRO 100 80 150 80 200 120 1 2 3 180 270 360 120 80 80 200 150 100 360 270 180 Suppose Ike's Bikes is currently producing 50 bikes per month in its only factory. Its short-run average total cost is per bike. Suppose Ike's Bikes is expecting to produce 50 bikes per month for several years. In this case, in the long run, it would choose to produce bikes using
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