5. Costs in the short run versus in the long run Q Ike's Bikes is a major manufacturer of bicydes. Currently, the company products 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: Qequals the total quantity of bikes produced by all factories.) Number of Factories Q = 100 440 Average Total Cost (Dollars per bike) Q = 300 Q400 240 320 Q = 500 Q200 280 Q = 600 800 480 2 380 240 240 380 620 800 620 3 480 320 240 280 440 Suppose Ike's Bikes is currently producing 100 bikes per month in its only factory. Its short-run average total cost is $440 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 bikes using three factories On the following graph ploe the three SRATC curves for Ike's Bikes from the previous table. Specifically, use the green points (triangle symbol) to plot its SRATC curve ir it operates one factory (SRATC); use the purple points (diamond symbol) to plot its SRATC curve if it operates two factores SRATCx); and use the orange points (square symbol) to plotits SRATC curve if it operates three factories (SRATC). Finally, plot the long run average total cost (LRATC) 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 800 720 A 640 SRATC 50 SRATC AVERAGE TOTAL COST (Dolars per bike) 400 300 SRATC 240 O- LRATC 30 100 200 500 600 700 300 400 QUANTITY (Bikes In the following table, indicate whether the long-run average cost curve exhibits economies of scale, constant returns to scale, or diseconomies or scale for each range of bike production Economies of Scale Range Fewer than 300 bikes per month Constant Returns to Scale Diseconomies of Scale Between 300 and 400 bikes per month More than 400 bikes per month