Posted by lost on Sunday, November 6, 2011 at 5:44pm.
The chief economist for Argus Corporation, a large appliance manufacturer, estimated the firm’s short- run cost function for vacuum cleaners using an average variable cost function of the form
AVC = a + bQ + cQ2
where AVC dollars per vacuum cleaner and Q number of vacuum cleaners produced each month. Total fixed cost each month is $180,000. The following results were obtained:
DEPENDENT VARIABLE:
AVC R-SQUARE 0.7360 F-RATIO 39.428 P-VALUE ON F 0.0001
OBSERVATIONS:19 0
pARAMETER STANDARD
VARIABLE ESTimate error
INTERCEPT 191.93 54.65
-0.0305 0.00789
0.0000024 0.00000098
T-RATIO P-VALUE
3.512 0.0029
23.866 0.0014
2.449 0.0262
a. Are the parameter estimates statistically significant at the 2 percent level of significance?
b. Do the results indicate that the average variable cost curve is U-shaped? How do you know?
c. If Argus Corporation produces 8,000 vacuum cleaners per month, what is the estimated average variable cost? Marginal cost? Total variable cost? Total cost?
d. Answer part c, assuming that Argus produces 10,000 vacuum cleaners monthly.
e. At what level of output will average variable cost be at a minimum? What is minimum average variable cost?
No one has answered this question yet.
Answer this Question
Related Questions
Managerial Econ 2 - 1)The chief economist for Argus Corporation, a large ...
econ - The economist for the Grand Corporation has estimated the company’s...
econ - Suppose a firm produces output using the technology Q=K1/3 L2/3 Find a. ...
microeconomics - The short-run cost curve for each firm's long run ...
Managerial ECON - You are planning to estimate a short- run production function ...
economics - This is going to be really long, but I want to see if my answers are...
econ - 1. Consider a pure monopolist with short-run total cost function given by...
Economics - Short run profit maximization - Given the following for perfectly ...
home economics - The economist for the Grand Corporation has estimated the ...
Economics - Suppose a perfectly competitive firm has a cost function described ...
For Further Reading
