11. Costs in the short run versus in the long runIke's Bikes is a major manufacturer of bicycles. Currently, the company produces bikes using only one factory. However, it is considering expandingproduction to two or even three factories. The following table shows the company's short-run average total cost each month for various levels ofproduction if it uses one, two, or three factories. (Note: Q equals the total quantity of bikes produced by all factories.)Number of Factories Q = 100260330400123Q= 200200240280Average Total Cost(Dollars per bike)Q = 300= 400160160200200160160= 500280240200= 600400330260Suppose 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 bikesusingOn the following graph, plot the three short-run average total cost curves (SRATC) for Ike's Bikes from the previous table. Specifically, use the greenpoints (triangle symbol) to plot its short-run average total cost if it operates one factory (SRATC1); use the purple points (diamond symbol) to plot itsshort-run average total cost if it operates two factories (SRATC2); and use the orange points (square symbol) to plot its short-run average total costif it operates three factories (SRATC 3). 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. if it operates three factories (SRATC 3). 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.AVERAGE TOTAL COST (Dollars per bike)40036032028024020016012080400O0O100200300400500QUANTITY OF OUTPUT (Bikes)More than 400 bikes per month600Between 300 and 400 bikes per monthFewer than 300 bikes per month700SRATC₁SRATC₂In the long run, over which range of output levels does Ike's Bikes experience constant returns to scale?SRATC 3LRATC?

Ike's Bikes is a bicycle manufacturer. Currently uses only one factory to manufacture bicycles.…

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.)