3. 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 pro- duced each month. Total fixed cost each month is $180,000. The following results were obtained: DEPENDENT VARIABLE: AVC R-SQUARE F-RATIO P-VALUE ON F 39.428 0.0001 OBSERVATIONS: 19 VARIABLE INTERCEPT Q Q2 > Show Transcribed Text PARAMETER ESTIMATE 191.93 -0.0305 0.0000024 3 0.7360 STANDARD ERROR 54.65 3.512 0.00789 23.866 0.00000098 2.449 T-RATIO Ć P-VALUE 0.0029 0.0014 0.0262 a. Are the estimates a, b, and ĉ 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?
3. 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 pro- duced each month. Total fixed cost each month is $180,000. The following results were obtained: DEPENDENT VARIABLE: AVC R-SQUARE F-RATIO P-VALUE ON F 39.428 0.0001 OBSERVATIONS: 19 VARIABLE INTERCEPT Q Q2 > Show Transcribed Text PARAMETER ESTIMATE 191.93 -0.0305 0.0000024 3 0.7360 STANDARD ERROR 54.65 3.512 0.00789 23.866 0.00000098 2.449 T-RATIO Ć P-VALUE 0.0029 0.0014 0.0262 a. Are the estimates a, b, and ĉ 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?
MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
Related questions
Question
Transcribed Image Text:3. 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 pro-
duced each month. Total fixed cost each month is $180,000. The following results were
obtained:
DEPENDENT VARIABLE: AVC R-SQUARE F-RATIO P-VALUE ON F
OBSERVATIONS: 19
VARIABLE
INTERCEPT
Q
Q2
Show Transcribed Text
PARAMETER
ESTIMATE
191.93
-0.0305
0.0000024
Ĵ
0.7360
STANDARD
ERROR
54.65
39.428
T-RATIO
3.512
0.00789
23.866
0.00000098 2.449
0.0001
P-VALUE
0.0029
0.0014
0.0262
a. Are the estimates â, b, and ĉ 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?
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