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##### ABC Machinery produces ice machine

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**Question**

QUESTIONS;1. Given the data, please construct a Short-Run total cost (TC) function (cubic function) by Excel regression for ABC Machinery. (20%);2. Given your answer in 1, please indicate how much the fixed cost (FC) is and what the marginal cost (MC) function is. (20%);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%? (20%);4. How much will be the total costs if ABC Machinery produces 200 ice machines in a month? Please show your calculation. (20%);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. (20%);(Hint: Make MR=MC then apply the quadratic formula to solve the equation.);Data;ABC Machinery;Total Cost ($1,000) Output Rate (Q);2251 121;1866 62;2310 153;2407 187;2109 87;2523 204;1726 43;2201 110;2170 92;1812 54;2736 233;2290 141;1910 66;2894 271;2277 139

Paper#28931 | Written in 18-Jul-2015

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