Answered: You collect the following production…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

You collect the following production data for your firm:

Q	L
196	2
1,155	6
443	3
62	1
1,114	9
712	5
1,045	7
631	4
903	11
1,232	10

a. Which functional form (linear, quadratic, cubic) is most suitable to your data? Construct a scatter diagram but be sure to just do the dots; don’t include the lines that connect them. Then, play around with the trendline feature and include what you consider to be the best trendline.

b. Using OLS, estimate the firm’s short-run production function. Comment on the strength of the regression results.

c. Calculate the Q, AP, and MP for L = 8 workers.

d. At 8 workers, is MC rising or falling, and how do you know?

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