Estimate the short-run total cost using the data below

Assignment Help Econometrics

Reference no: EM131148017

Exercise: Below are data on quantity produced at a group of shirt manufacturing plants. Each plant also reports its total cost. This exercise tests your knowledge of empirically verifying economic theory of short-run production cost. From the Principles of Microeconomics, we discussed that the short-run cost equals (1) TC = TFC + TVC. This equation can be further reduced to as: (2) TC = TFC + mc*Q, where mc is the marginal cost which is the slope of the TC equation. Now, let us convert equation 2 into a simple linear equation learned in college algebra: (3) TC = a + b*Q, where a=TFC and b=mc (marginal cost).

a. Using equation 3, a theoretical regression equation of the short-run total cost, estimate the short-run total cost using the data below. Then write the estimated cost equation. Indicate the value of the total fixed cost and of the marginal cost from the estimated cost equation.

b. Forecast total cost for a plant producing 28 (000s) units.
Quantity (000s) Total Cost ($000s)
21.80 $ 171.11
20.81 $158.40
20.96 $165.24
19.73 $161.18
16.65 $137.53
20.54 $165.39
22.24 $171.58
19.44 $153.54
17.24 $142.82
18.67 $153.43
19.78 $143.63
18.86 $148.53
17.58 $147.89
26.64 $203.29
22.16 $176.69
17.41 $149.36
22.02 $176.38
26.39 $194.31
26.71 $196.37
23.77 $177.11
17.42 $136.14
21.76 $166.04
23.97 $180.82
21.01 $159.99
26.34 $187.62

Reference no: EM131148017

Questions Cloud

Evaluate costs factors influencing the company''s decision : Prepare this assignment according to the guidelines found in the APA Style Guide, located in the Student Success Center. An abstract is not required.

Create a three-column chart : reate a three-column chart in which the first column lists nonmanagement skills you have. Are you good at travel? Do you know how to build furniture?

Identify economic, legal, and regulatory forces and trends : Identify economic, legal, and regulatory forces and trends. Critique how well the organization adapts to change

Program to design an appointment calendar : Write a program to design an appointment calendar. An appointment includes the date, starting time, ending time, and a description;

Estimate the short-run total cost using the data below : Using equation 3, a theoretical regression equation of the short-run total cost, estimate the short-run total cost using the data below. Then write the estimated cost equation. Indicate the value of the total fixed cost and of the marginal cost fr..

How many shares were used to calculate eps : How many shares were used to calculate E.P.S.? What is the amount of Net Earnings? List 3 examples of selling and administrative expenses. What is the amount of Gross Margin?

What are economies of scale in a manufacturing plant : What are economies of scale in a manufacturing plant? Do they continue forever? What are diseconomies of scale? How might you decide the optimal size of a plant?

Construct an sql schema definition for database : Construct an SQL schema definition for this database. Use inheritance where appropriate.

Explain project management as a discipline : Explain project management as a discipline. Describe the industries in which project managers are in high demand. Provide evidence to support your response

User Account

All Pages