Costs in the short run versus 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 cost 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.$)$

Suppose Ike's Bikes is currently producing $100$ bikes per month in its only factory. Its short$-$run average cost is

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

one factory

On the

two factories

plot the three short$-$run average cost $($SRAC$)$ curves for Ike's Bikes from the previous table. Specifically, use the green points

$($trians

$t$ its short$-$run average cost if it operates one factory $(SRA{C}_1)$; use the purple points $($diamond symbol$)$ to plot its short$-$run

avera! three factories

tes two factories $(SRA{C}_2)$; and use the orange points $($square symbol$)$ to plot its short$-$run average cost if it operates three

factories $(SKA{C}_3).$ Finally, plot the long$-$run average cost $($LRAC$)$ 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.

In the long run, over which range of output levels does Ike's Bikes experience decreasing returns to scale?

Between $300$ and $400$ bikes per month

Fewer than $300$ bikes per month

More than $400$ bikes per month