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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

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 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)
Suppose Ike's Bikes is currently producing 100 bikes per month in its only factory. Its short-run average total 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
On the following graph, plot the three short-run average total cost curves (SRATC) for Ike's Bikes from the previous table. Specifically, use the green
points (triangle symbol) to plot its short-run average total cost if it operates one factory (SRATC); use the purple points (diamond symbol) to plot its
short-run average total cost if it operates two factories (SRATC2); and use the orange points (square symbol) to plot its short-run average total cost
if it operates three factories (SRATC3). Finally, plot the long-run average 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.
In the long run, over which range of output levels does Ike's Bikes experience constant returns to scale?
Between 300 and 400 bikes per month
More than 400 bikes per month
Fewer than 300 bikes per month
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