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##### ABC Machinery produces ice machine with historical

**Description**

solution

**Question**

The attachment has the data for the following questions.;ABC Machinery produces ice machine with historical (monthly) data in the Excel file. Please construct its short-run total cost function to answer the following questions;QUESTIONS;1. Given the data, please construct a Short-Run total cost (TC) function (cubic function) by Excel regression for ABC Machinery.;2. Given your answer in 1, please indicate how much the fixed cost (FC) is and what the marginal cost (MC) function is.;3. Please comment on whether the estimated function in question 1 is a good fit or not. What is the interpretation of coefficient of determination (R-square)? Does the regression show overall significance at 5%?;4. How much will be the total costs if ABC Machinery produces 200 ice machines in a month? Please show your calculation.;5. Assume that the marginal revenue (MR) function (at unit of $1,000) of ABC ice machine is;MR = 30? 0.1Q;In order to maximize the monthly profit, what will be the optimal output level? Please show your calculation.;(Hint: Make MR=MC then apply the quadratic formula to solve the equation.);Attachment Preview;Data2.xls;ABC Machinery;Total Cost ($1,000);2251;1866;2310;2407;2109;2523;1726;2201;2170;1812;2736;2290;1910;2894;2277;Output Rate (Q);121;62;153;187;87;204;43;110;92;54;233;141;66;271;139

Paper#28512 | Written in 18-Jul-2015

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