February 26, 2017

Homework Help: Economics

Posted by TrickyEconomics on Wednesday, July 22, 2009 at 8:22pm.

Please help me on this one!

You are planning to estimate a short-run production function for your firm, and you have the following data on labor usage and output:

Labor Output
3 1
7 2
9 3
11 5
17 8
17 10
20 15
24 18
26 22
28 21
30 23

A- Does a cubic equation appear to be a suitable specification, given these data? You may wish to construct a scatter diagram to help you answer this question.

B- Using a computer and software for regression analysis, estimate your firm short term production function using the data given here. Do the parameter estimates have appropriate algebraic signs? Are they statiscally significant at the 5 percent level?

C- At what point do you estimate marginal product begins to fall?

D- Calculate estimates of total, average, and marginal products when the firm employs 23 workers?

E- When the firm employs 23 workers, is short run marginal cost (SMC) rising or falling? How can you tell??

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