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:a) Are the estimates ˆa ,ˆb , and cˆ statistically significant at the 2 percent level of significance? Which is/are significant and which is/are not? b) Do the results indicate that the average variable cost curve is ∪-shaped? How do you know?c) If Argus Corporation produces 8,000 vacuum cleaners per month, what is the estimated average variable cost? Marginal cost? Total variable cost? Total cost? d) Answer part c, assuming that Argus produces 10,000 vacuum cleaners monthly. e) at what level of output will average variable cost be at a minimum? What is the minimum average variable cost? DEPENDENT VARIABLE: AVCR-SQUAREF-RATIOP-VALUE ON FOBSERVATIONS: 190.736039.4280.0001PARAMETERSTANDARDVARIABLEESTIMATEERRORT-RATIOP-VALUEINTERCEPT191.9354.653.5120.0029Q-0.03050.0078923.8660.0014Q20.00000240.000000982.4490.0262

Name: The chief economist for Argus Corporation, a large appliance manufactu
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Description: 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

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MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

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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:

a) Are the estimates ˆa ,ˆb , and cˆ statistically significant at the 2 percent level of significance? Which is/are significant and which is/are not?
b) Do the results indicate that the average variable cost curve is ∪-shaped? How do you know?
c) If Argus Corporation produces 8,000 vacuum cleaners per month, what is the estimated average variable cost? Marginal cost? Total variable cost? Total cost?
d) Answer part c, assuming that Argus produces 10,000 vacuum cleaners monthly.
e) at what level of output will average variable cost be at a minimum? What is the minimum average variable cost?

DEPENDENT VARIABLE: AVC
R-SQUARE
F-RATIO
P-VALUE ON F
OBSERVATIONS: 19
0.7360
39.428
0.0001
PARAMETER
STANDARD
VARIABLE
ESTIMATE
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

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