(2) TC = QPL¹PK²PF³.

TC = Total Cost

Q = total local and long distance minutes,

PL = price of labor,

PK = price of capital,

PF = price of raw materials.

Based on the estimated total cost function what is the AT&T marginal cost function with respect to output (Q)? This is the MC function, not a single number.

What is the elasticity of total cost of production with respect to output (Q)

Based on the estimated total cost of production function, is AT&T experiencing economies of scale, constant economies of scale, or diseconomies of scale? AT&T is experiencing economies/constant/diseconomies (choose one) ________ because (give brief reason) __________.

SUMMARY OUTPUT Regression Statistics Multiple R 0.987671825 R Square 0.975495634 Adjusted R Square 0.972772926 Standard Error 0.181365083 Observations 31 ANOVA df SS 3 Regression Residual Total MS F Significance F 11.78505793 358.2814831 7.57131E-22 0.032893293 35.35517379 0.888118921 36.24329271 27 30 Intercept PL Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0% -1.522259686 0.358715759 -4.243637609 0.00023166 -2.258283627 -0.786235745 -2.258283627 -0.786235745 0.131098951 0.561121948 0.233637182 0.817029044 -1.020228187 1.282426088 -1.020228187 1.282426088 0.246795531 0.363908846 0.678179533 0.503429138 -0.499883745 0.993474807 -0.499883745 0.993474807 2.948727255 1.100702334 2.67895067 0.012421266 0.690272617 5.207181894 0.690272617 5.207181894 PK PF SUMMARY OUTPUT Regression Statistics Multiple R 0.987671825 R Square 0.975495634 Adjusted R Square 0.972772926 Standard Error 0.181365083 Observations 31 ANOVA df SS 3 Regression Residual Total MS F Significance F 11.78505793 358.2814831 7.57131E-22 0.032893293 35.35517379 0.888118921 36.24329271 27 30 Intercept PL Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0% -1.522259686 0.358715759 -4.243637609 0.00023166 -2.258283627 -0.786235745 -2.258283627 -0.786235745 0.131098951 0.561121948 0.233637182 0.817029044 -1.020228187 1.282426088 -1.020228187 1.282426088 0.246795531 0.363908846 0.678179533 0.503429138 -0.499883745 0.993474807 -0.499883745 0.993474807 2.948727255 1.100702334 2.67895067 0.012421266 0.690272617 5.207181894 0.690272617 5.207181894 PK PF