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...


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:AVCR-SQUAREF-RATIOP-VALUE ON F
OBSERVATIONS:19 0.736039.428 0.0001
VARIABLE

 PARAMETER


ESTIMATE


STANDARD ERRORT-RATIOP-VALUE
INTERCEPT191.9354.653.5120.0029
Q-0.03050.0078923.866 0.0014
Q2 0.00000240.000000982.449 0.0262

f) At what level of output will average variable cost be at a minimum?



Jun 09, 2022
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