economics homework on cost function

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Complete the following questions on cost function:

1.       Write the cost function resulting from your regression results. Include specific coefficients.

2.       Estimate the total, average, and marginal costs for a firm with a quantity sold of 60,000 units.

3.       Is a firm operating at the point identified in question 2 operating at a profit-maximizing level of output? How do you know? If they are not, should they expand or reduce quantity sold to move closer to the profit maximization level? Explain your reasoning.

 

4.       Estimate the average cost for a firm with a quantity sold of 70,000 units. Compare your answer with the answer to question #2 above. Does the manufacturer appear to have economies of scale? How do you know? 

 

Please let me know if you can help, and make sure the calculations show on the spreadsheet.

The spreadsheet must be organized as follows:


·         Tab 2: Original data

 

·         Tab 5: Output and answers to questions for cost function (Copy the data necessary to the top of this spreadsheet before running the regression.)

 

 

 

Data               
               
Total cost = sum of all costs of doing business              
Q sold = the quantity sold (in units) that quarter              
Q prod = the quantity produced (in units) that quarter              
Q dem = the quantity demanded (in units) that quarter              
Price = price per unit charged by the firm              
Labor = # labor hours used in production in that quarter. For purposes of this assignment, assume that all labor hours are identical.              
Capital Investment = the number of plants in operation that quarter. Assume for the sake of this project, that all plants are approximately equal in size and use of technology.              
Advertising Expenses = dollars spent on advertising that quarter              
       CapitalConsumerAdvertising     
 TCQsoldQprodQdemPriceLaborInvestIncomeExpenses     
Qtr 1$4,415,000499,999499,999549,425$9.2550,0005$20,000$150,000     
Qtr 2$5,186,644587,236587,236714,993$9.2560,0005$20,600$150,000     
Qtr 3$5,174,189548,667647,480548,667$9.7570,0005$21,000$125,000     
Qtr 4$7,282,201766,297667,484833,521$9.6575,0005$21,200$200,000     
Qtr 5$7,630,401811,784811,764860,747$9.9085,0006$21,400$200,000     
Qtr 6$6,971,144697,396828,822697,396$10.2595,0006$22,000$150,000     
Qtr 7$7,915,228715,182829,046829,046$11.50100,0006$21,600$325,000     
Qtr 8$6,901,834764,199769,903769,903$10.0075,0006$21,600$150,000     
Qtr 9$7,719,569811,784811,784811,784$10.0585,0006$21,600$225,000     
Qtr 10$4,011,162425,280656,281656,281$10.7560,0006$21,200$125,000     
Qtr 11$8,688,700744,619829,046829,046$11.76100,0006$22,000$400,000     
Qtr 12$8,780,822673,0091,106,4711,103,171$12.35140,0008$22,000$400,000     
         
  • 9 years ago
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