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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?

Algebra & Trigonometry with Analytic Geometry
Algebra & Trigonometry with Analytic Geometry
13th Edition
ISBN:9781133382119
Author:Swokowski
Publisher:Swokowski
Chapter7: Analytic Trigonometry
Section7.6: The Inverse Trigonometric Functions
Problem 94E
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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?
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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