A firm estimated its short-run costs using an average variable cost function of the form AVC=a+b
Question: A firm estimated its short-run costs using an average variable cost function of the form
\[AVC=a+bQ+c{{Q}^{2}}\]and obtained the following results. Total fixed cost is $1,000.
| DEPENDENT VARIABLE: | AVC | R-SQUARE | F-RATIO | P-VALUE ON F | |
| OBSERVATIONS: | 35 | 0.8713 | 108.3 | 0.0001 | |
| VARIABLE | PARAMETER ESTIMATE | STANDARD ERROR | T-RATIO | P-VALUE | |
| INTERCEPT | 43.40 | 13.80 | 3.14 | 0.0036 | |
| Q | -2.80 | 0.90 | -3.11 | 0.0039 | |
| Q2 | 0.20 | 0.05 | 4.00 | 0.0004 | |
(a) . At what level of output is AVC minimum? What is the minimum AVC?
(b) What are the estimated AVC and TC when the firm produces 20 units of output?
(c) What is estimated MC when the firm produces 12 units of output?
Price: $2.99
See Answer: The solution consists of 3 pages
Deliverables: Word Document
Deliverables: Word Document
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