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.) NOTE: the options for the blank question is thisSuppose 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 _______ (once factory OR two factory OR three factory) un e TonoWny grapi, proc LIe Lree JIC curves ro IKE S DIKCS Tom Ie previous LOIC. Jpecmoany, use LITe green poILS (LIIarnyie symvoIy Cu pioLits SRATC if it operates one factory (SRATC1), use the purple points (diamond symbol) to plot its short-run average total cost if it operates twofactories (SRATC2), and use the orange points (square symbol) to plot its SRATC if it operates three factories (SRATC3). Finally, plot the long-runaverage 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.(?)800720SRATC,640560SRATC,480400320SRATC,240160LRATC80100200300400500600700QUANTITY OF OUTPUT (Bikes)RangeEconomies of ScaleConstant Returns to ScaleDiseconomies of ScaleBetween 300 and 400 bikes per monthFewer than 300 bikes per monthMore than 400 bikes per monthAVERAGE TOTAL COST (Dollars per bike) 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 (SRATC) each month for various levelsof 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 = 100Q = 200Q = 300 Q = 400Q = 500Q = 600%3D136020016024040072025403001601603005403720400240160200360Suppose 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 bikesusingOn the following graph, plot the three SRATC curves for Ike's Bikes from the previous table. Specifically, use the green points (triangle symbol) to plotits SRATC if it operates one factory (SRATC1), use the purple points (diamond symbol) to plot its short-run average total cost if it operates twofactories (SRATC2), and use the orange points (square symbol) to plot its SRATC if it operates three factories (SRATC3). Finally, plot the long-runaverage 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.800720SRATC,6401580480SRATC,400OST (Dollars per bike)

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.) NOTE: the options for the blank question is thisSuppose 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 _______ (once factory OR two factory OR three factory) un e TonoWny grapi, proc LIe Lree JIC curves ro IKE S DIKCS Tom Ie previous LOIC. Jpecmoany, use LITe green poILS (LIIarnyie symvoIy Cu pioLits SRATC if it operates one factory (SRATC1), use the purple points (diamond symbol) to plot its short-run average total cost if it operates twofactories (SRATC2), and use the orange points (square symbol) to plot its SRATC if it operates three factories (SRATC3). Finally, plot the long-runaverage 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.(?)800720SRATC,640560SRATC,480400320SRATC,240160LRATC80100200300400500600700QUANTITY OF OUTPUT (Bikes)RangeEconomies of ScaleConstant Returns to ScaleDiseconomies of ScaleBetween 300 and 400 bikes per monthFewer than 300 bikes per monthMore than 400 bikes per monthAVERAGE TOTAL COST (Dollars per bike) 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 (SRATC) each month for various levelsof 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 = 100Q = 200Q = 300 Q = 400Q = 500Q = 600%3D136020016024040072025403001601603005403720400240160200360Suppose 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 bikesusingOn the following graph, plot the three SRATC curves for Ike's Bikes from the previous table. Specifically, use the green points (triangle symbol) to plotits SRATC if it operates one factory (SRATC1), use the purple points (diamond symbol) to plot its short-run average total cost if it operates twofactories (SRATC2), and use the orange points (square symbol) to plot its SRATC if it operates three factories (SRATC3). Finally, plot the long-runaverage 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.800720SRATC,6401580480SRATC,400OST (Dollars per bike)

Accepted Answer

The average total cost(ATC) can be defined as the cost per unit of output of a commodity, it is…