Determine at what level of output does smc equal avc

Reference no: EM13241811

Use a computer regression package or Excel to work this computer exercise. Palm Products Company has collected data on its average variable costs of production for the past 12 months. The costs have been adjusted for inflation by deflating with an appropriate price index. The AVC and associated output data are presented below:
obs Q AVC obs Q AVC
1 22 $208 7 45 $172
2 31 202 8 45 158
3 31 206 9 45 173
4 25 214 10 62 170
5 41 174 11 62 152
6 41 203 12 70 175

a. Run the appropriate regression to estimate the parameters for the empirical cost function 2
AVC = a + bQ + cQ .

b. Using a 10 percent significance level, discuss suitability of the parameter estimates obtained in part a. Consider both the algebraic signs and statistical significance of the parameter estimates.

c. Present the estimated average variable cost, total variable cost, and short-run marginal cost functions.

d. At what level of output does AVC reach its minimum value? What is the minimum value of AVC at its minimum?

e. Compute AVC and SMC when Palm Products produces 20 units of output. Is AVC rising or falling when Palm produces 20 units? Explain.

f. At what level of output does SMC equal AVC?

Reference no: EM13241811

Questions Cloud

Indicate the probable motivation for rpm : The fashion (clothing), consumer electronics, fine fragrance industries are knwon to practice or have practiced resale price maintenance. In each case,indicate the probable motivation for RPM and the likely welfare consequences.

How much money will downstream manufactuers make : Various computer manufacturers produce homogenous computers. Cost of production per computer is equal to $1000 + PM where the $1000 captures other computer component costs, such as the microprocessor, monitor, etc.

Find the time constant of the circuit : A capacitor is charged to a potential of 12.0 V and is then connected to a voltmeter having an internal resistance of 3.10M, What is the time constant of the circuit

What is the difference between customer satisfaction : What is the difference between customer satisfaction and customer loyalty? Why is it important to distinguish between these two concepts?

Determine at what level of output does smc equal avc : Use a computer regression package or Excel to work this computer exercise. Palm Products Company has collected data on its average variable costs of production for the past 12 months.

Find the maximum speed achieved by the sphere : Two plastic spheres, each carrying charge uniformly distributed throughout its interior, are initially placed in contact and then released, Find the maximum speed achieved by the sphere of mass 50.0g

Determine the acceleration of the particle : a particle is moving in the xy plane with constant acceleration. at t=0, it has a velocity of v=(4.00i-5.00j) m/s. At t=4.00 s, determine the acceleration of the particle (magnitude and direction)

Compute the intrinsic viscosity in units : A small spherical virus has a molecular weight of 1.25x10^6 g/mol and a diameter of 100 Angstrom. Calculate the intrinsic viscosity in units of cm3/g of an aqueous solution of this virus.

What is sams top speed : Sam, whose mass is 80kg , takes off across level snow on his jet-powered skis. The skis have a thrust of 250N and a coefficient of kinetic friction on snow of 0.1, What is Sam's top speed

User Account

All Pages