Managerial Economics Assignment (Doc)
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Skyline University College
Added on 2020-04-21
Managerial Economics Assignment (Doc)
Skyline University College
Added on 2020-04-21
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Running head: MANAGERIAL ECONOMICSManagerial EconomicsName of the StudentName of the UniversityAuthor note
MANAGERIAL ECONOMICS1Table of ContentsAnswer 1..........................................................................................................................................2Answer a......................................................................................................................................2Answer b......................................................................................................................................3Answer c......................................................................................................................................3Answer 2..........................................................................................................................................4Answer a......................................................................................................................................4Answer b......................................................................................................................................6Answer c......................................................................................................................................7Answer 3..........................................................................................................................................8Answer 4..........................................................................................................................................9Answer a......................................................................................................................................9Answer b....................................................................................................................................10Answer 5........................................................................................................................................10Answer a....................................................................................................................................10Answer b....................................................................................................................................10Answer 6........................................................................................................................................10Answer 7........................................................................................................................................11
MANAGERIAL ECONOMICS2Answer 1Answer aRegression StatisticsMultiple R0.80R Square0.63Adjusted R Square0.60Standard Error7.73Observations26ANOVAdfSSMSFSignificanceFRegression22387.4981193.74919.9750.000Residual231374.54159.763Total253762.038CoefficientsStandardErrort StatP-valueLower 95%Upper95%Intercept152.8816.60523.1460.000139.217166.544Q-0.0610.015-4.1990.000-0.092-0.031Q20.000020.0002.6930.0130.0000.000The regression result shows the estimated relation between average variable cost and quantity.The value of intercept a = 152.881. The p value is 0.0000. This means the intercept is statisticallysignificant. The coefficient of Q is b = -0.061. This implies with a rise in quantity averagevariable cost decreases. This is what happens at the early stages of production. The P value forthe variable is 0.000 implying statistical significance of quantity. The next variable in theAverage cost function is Q2. The estimated coefficient is c= 0.00002. The positive sign of the
MANAGERIAL ECONOMICS3parameter shows a positive relation between average variable cost and Q2. The implication is thatas quantity starts increasing at a rapid rate then cost also increases. The P value is 0.013. As the pvalue is less than 0.05, the variable Q2 is statistically significant. Answer bThe Average Variable Cost function is AVC=152.881−0.061Q+0.00002Q2The Total Variable Cost Function is Quantity times the average variable cost.TVC = Q*AVC = Q (a + b Q + cQ2)TVC=Q(152.881−0.061Q+0.00002Q2)¿152.881Q−0.061Q2+0.00002Q3The Marginal Cost Function is the change in total cost due to unit change in quantity. Themarginal cost function is obtained asMC=d(TVC)dQ¿d(152.881Q−0.061Q2+0.00002Q3)dQ¿152.881−0.122Q+0.00006Q2Answer cAVC = 152.881 – 0.061Q + 0.00002Q2
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