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 F-RATIO P-VALUE ON F OBSERVATIONS: 19 0.7360 39.428 0.0001 VARIABLE PARAMETER ESTIMATE STANDARD ERROR T-RATIO P-VALUE INTERCEPT 191.93 54.65 3.512 0.0029 Q -0.0305 0.00789 23.866 0.0014 Q2 0.0000024 0.00000098 2.449 0.0262 f) At what level of output will average variable cost be at a minimum?
Unitary Method
The word “unitary” comes from the word “unit”, which means a single and complete entity. In this method, we find the value of a unit product from the given number of products, and then we solve for the other number of products.
Speed, Time, and Distance
Imagine you and 3 of your friends are planning to go to the playground at 6 in the evening. Your house is one mile away from the playground and one of your friends named Jim must start at 5 pm to reach the playground by walk. The other two friends are 3 miles away.
Profit and Loss
The amount earned or lost on the sale of one or more items is referred to as the profit or loss on that item.
Units and Measurements
Measurements and comparisons are the foundation of science and engineering. We, therefore, need rules that tell us how things are measured and compared. For these measurements and comparisons, we perform certain experiments, and we will need the experiments to set up the devices.
The chief economist for Argus Corporation, a large appliance manufacturer, estimated the firm’s short-run cost
| DEPENDENT VARIABLE: | AVC | R-SQUARE | F-RATIO | P-VALUE ON F |
| OBSERVATIONS: | 19 | 0.7360 | 39.428 | 0.0001 |
| VARIABLE |
PARAMETER ESTIMATE |
STANDARD ERROR | T-RATIO | P-VALUE |
| INTERCEPT | 191.93 | 54.65 | 3.512 | 0.0029 |
| Q | -0.0305 | 0.00789 | 23.866 | 0.0014 |
| Q2 | 0.0000024 | 0.00000098 | 2.449 | 0.0262 |
f) At what level of output will average variable cost be at a minimum?
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