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##### ECO - We frequently hear the following terms used by businessperson

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Question;Chapter 9#6. We frequently hear the following terms used by businesspersons. What does each mean ineconomic terminology?A. spreading the overhead.B. A break-even level of productionC. The efficiency of mass production.#2. Dimex Fabrications Co., a small manufacturer of sheet-metal body parts for a major U.S.automaker, estimates its long-run production function to beQ= -0.015625K3L3 + 10 K2 L2where Q is the number of body parts produced daily, K is the number of sheet-, metal presses inits manufacturing plant, and L is the number of labor-hours per day of sheet-metal workersemployed by Dimex. Dimex is currently operating with eight sheet-metal presses.a. What is the total product function for Dimex? The average product function? The marginalproduct function?b. Managers at Dimex can expect the marginal product of additional workers to fall beyond whatlevel of labor employment?c. Dimex plan to employ 50 workers. Calculate total product, average product, and marginalproduct#3. The chief economist for Argus Corporation, a large appliance manufacturer, estimated thefirms short-run cost function for vacuum cleaners using an average variable cost function of theformAVC = a + bQ + cQ2where AVC dollars per vacuum cleaner and Q number of vacuum cleaners produced each month. Totalfixed cost each month is \$180,000. The following results were obtained:DEPENDENT VARIABLE: AVC R-SQUARE F-RATIO P-VALUE ON FOBSERVATIONS: 190 0.736039.4280.001VARIABLEINTERCEPTQQ2PARAMETEREstimate194.93-0.03050.0000024STANDARD T-RATIO P-VALUEError54.650.007890.00000098.51223.8662.4490.00290.00140.0262a. Are the parameter estimates a, b, and c statistically significant at the 2 percent level of significance?b. Do the results indicate that the average variable cost curve is U-shaped? How do you know?c. If Argus Corporation produces 8,000 vacuum cleaners per month, what is the estimated averagevariable 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 minimum average variablecost?

Paper#55537 | Written in 18-Jul-2015

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