3. Cosls 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 = 5|] Q = 101] Q = 150 Q = zoo Q = 250 Q = 300 1 180 100 80 120 200 360 2 23"[1 150 80 80 150 2]"0 3 360 200 1.20 80 100 180 Suppose Ike's Bikes is currently producing 50 bikes per month in its only factory. Its shortrun 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 v 0n the following graph, plot the three SRATC curves for Ike's Bikes from the previous table. Specically, use the green points (triangle symbol) to plot its SRATC curve if it operates one factory (HEIDI); use the purple points ( diamond symbol) to plot its SRATC curve if it operates two factories ( SW3); and use the orange points (square symbol) to plot its SRATC curve if it operates three factories {SW3}. Finally, plot the longrun average total cost {LR/l. TC) curve 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. 400 * 350 2 32,0 seems, I: :'3 230 . a 3 g 240 seem:2 ._ e 200 -I- O 2 I5 13 seem:3 ,_ g \"120 . B SD 5 LRATC q; 40 0 50 100 150 200 250 300 350 QUAN 11w {Bikes} In the following table, indicate whether the long-run average cost curve exhibits economies of scale, constant returns to scale, or diseconomies of scale for each range of bike production. Range Economies of Scale Constant Returns to Scale Diseconomies of Scale More than 200 bikes per month O O O Between 150 and 200 bikes per month O O O Fewer than 150 bikes per month O O O