23 Jun sing a computer and software for regression an
sing a computer and software for regression analysis, estimate your firms short run production function using the data given here. Do the parameter estimates have the appropriate algebraic signs? Are they statisically significant at the 10 percent level?
c) At what point do you estimate marginal product begins to fall?
d) Calculate estimates of tota, average, and marginal products when the firm employs 23 workers.
e) When the firm employes 23 workers, is short-run marignal cost (SMC) rising or falling? How can you tell?
2. Dimex Fabrication Company, a small manufacturer of sheet-metal body parts for a major U.S automaker, estimates its long-run production function to be:
Q = -0.015625K3L3 + 10K2L2
Where “Q” is the number of body parts produced daily, “K” is the number of sheet-metal presses in its manufacturing plant, and “L” is the number of labor-hours per day of sheet-metal workers employed by Dimex. Dimex is currently operating with eight sheet-metal presses.
a) What is the total product function for Dimex? The average product function? The
marginal product function?
b) Managers at Dimex can expect the marginal product of additional workers to fall beyond what level of labor employment?
c) Dimex plans to employ 50 workers. Calculate the total product, average product and marginal product.
3. The chief economist for Argus Corporation, a large appliance manufacturer, estimated the firms short-run cost function for vacuum cleaners using an average variable cost function of the form.
AVC= a + bQ+ cQ^2
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:AVC R-Square F-Ratio P-Value on F
Observations:19 0.7360 39.428 0.0001
Variable Parameter Estimate Standard Error T-Ratio P-Value
Intercept 191.93 54.65 3.512 0.0029
Q -0.0305 0.00789 23.866 0.0014
Q2 0.0000024 0.00000098 2.449 0.0262
a. Are the estimates a,b,c statistically significant at the 2 percent level of significance?
b. Do the results indicate that the average variable cost curve is U
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