Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

S. Costs in the short run versus in the long run tke's Bikes is a major manufacturer of bicycles. Currently, the company produces bikes using

image text in transcribed
image text in transcribed
image text in transcribed
S. Costs in the short run versus in the long run tke'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 factones. (Note: Q equals the total quantity of bikes produced by all factories.) Number of factories Q = 50 Q=100 Average Total Cost (Dollars per bike) 0 - 150 Q200 80 120 80 80 Q 250 O = 300 180 100 200 360 270 150 150 270 200 20 80 100 180 Suppose Ike's Bikes is currently producing so bikes per month in its only factory. Its short-run average total cost is S perbike Support Ike's Bikes is expecting to produce so bikes per month for several years. In this case, in the long run, ce would choose to produce bikes using On the following graph plor the three SRATC curves for Ike's Bakes from the previous table Specifically, use the creen points (trenge symbol) to plot SSRATC curve if it operates one factory (SRATC), use the purple pones (diamond symbol) to plor SRATC curve of at operates two factories SRATC.); and use the orange poines (square symbol) to plotis SRATC curved it operates three faceones (SRATCS) Finally, plot the long run average total cost (CRATC) curve for Ike's Bikes using the blue points (onde symbol). Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically 400 360 200 SRATC, 200 SRATC -0- AVERAGE TOTAL COST Dolars per ko) 200 160 SRATO 120 NO LRATC 40 100 $ 150 200 QUANTITY (Bikes In the following table, indicate whether the long run average cost curve exhibits economies of scale, constant returns to scale, or desconomies of scale for each range of bike production 320 280 240 SRATC 200 AVERAGE TOTAL COST(Dars per 160 SRATO, 10 LRATC 0 SO 100 300 250 350 150 200 QUANTITY (Bikes) In the following table, indicate whether the long run average cost curve exhibits economies of scale constant returns to scale or deconomies of Scale for each range of bike production Range Economies of Scale Constant Returns to Scale Disconomies of Scale More than 200 bikes per month Between 150 and 200 per month Fewer than 150 bike per month

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Security And Auditing Of Smart Devices

Authors: Sajay Rai, Philip Chukwuma, Richard Cozart

1st Edition

0367567997, 978-0367567996

More Books

Students also viewed these Accounting questions