Answer the following detailed answers please.Thank you.
CASE 2 - COST STRCTURE and PRICING: Sting Ray PoolVac, Inc. manufactures and sells a single product called the "Sting Ray," which is a patent-protected automatic cleaning device for swimming pools. PoolVac's Sting Ray faces its closest competitor, Howard Industries, also selling a competing pool cleaner. Using the last 26 quarters of production and cost data, PoolVac wishes to estimate its average variable costs using the following quadratic specification: AVC =a+bQ+cq'. The quarterly data on average variable cost (AVC), and the quantity of Sting Rays produced and sold each quarter (Q) are presented in the data file. PoolVac also wishes to use its sales data for the last 26 quarters to estimate demand for its Sting Ray. Demand for Sting Rays is specified to be a linear function as the following: 0) = d + eP + fM + gPw. in which its price (P), average income for households in the U.S. that have swimming pools (M), and the price of the competing pool cleaner sold by Howard Industries (P,). QUESTIONS 1. Run the appropriate regression to estimate the average variable cost function (AVC) for Sting Rays. Evaluate the statistical significance of the three estimated parameters using a significance level of 5 percent. Be sure to comment on the algebraic signs of the three parameter estimates. (30%) 2. Given your answer in 1, show the estimated total variable cost, average variable cost, and marginal cost functions (7VC, AVC, and MC) for PoolVac. (15%) 3. Apply dummy variables to construct the time-series quarterly sales estimation of Sting Ray (Hint: Q = A+8+Dy...). Please predict the quantity sold in the first quarter 2014. (10%) 4. Run the log-linear regression to estimate the demand function for Sting Rays. Evaluate the statistical significance of the three estimated coefficients of parameters by using a significance level of 5 percent. Discuss the elasticities (price elasticity of demand, income elasticity and cross-price elasticity) to define the characters of Sting Ray. (20%) 5. The manager at PoolVac, Inc. believes Howard Industries is going to price its automatic pool cleaner at $250, and average household income in the U.S. is expected to be $65,000. Please run a multiple linear regression then explore the inverse demand function (i.e. Price is dependent variable) and marginal revenue (MR) function (Hint: Half-way rule). (15%) 6. Given your MC function in question 2 and MR function in question 5, what is the profit-maximizing unit price PoolVac should charge for Sting Ray? (Hint: Solve the quadratic equation by quadratic formula (10%) -btob - 4ac1. Derive the AD and AS relations. Consider the following economy: c=C+C1(Y_T) I=b+b1Y_b2i Government spending is given by G. The real money supply is MVP, and real money demand is given by doY/i. Suppose the wage is set according to W=P'(1au+z). The production function in this economy is given by Y = N, where N is employment, and labor force is given by L. The price of goods is set according to P = (1 + m)W Note that ha, b1, 132, cu, c1, do, a, m,z are positive constants. (a) Derive the IS relation. (b) Derive the LM relation. (c) Combining your results in (a) and (b), derive the AD relation. Explain Why it is called the AD (aggregate demand) relation. (d) Derive the AS relation. Explain why it is called the AS (aggregate supply) relation. (e) Solve the output in the medium run1 i.e., potential output Yn. (f) How does a monetary expansion affect Yn? How does a scal consolidation a'ect 1'\"? Do your results t the predictions from the examples in our lecture? For this assignment, read the following prompt then address the question based on what you learned about the economics of health care as a Text Submission. Prompt Under the current U.S. health care system, insurance companies often perform the role done by government agencies under the Canadian system. That is, they pay the bills, and they limit the care that people are able to consume. Question Why might health insurance companies be expected to do a better job in performing these functions than a government agency? Begin your answer by rephrasing the question as a statement. The best way to start an answer is to rephrase the question in the form of a statement. Opening your answer in this way signals to the professor that you have read and understood the question. Rephrasing the question also helps you to stay focused on providing an answer to that question right from the start. . For example, imagine that your question asks: "Should the FIFA World Cup be awarded to countries with human rights violations? Explain and support your answer." . You might restate this as "Countries with human rights violations should not be awarded the FIFA World Cup because this rewards a nation's poor treatment of its citizens." This will be the thesis that you support with examples and explanation
