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At what amount of output does labor change from exhibiting increasing returns to decreasing returns? 2. Smelling of Tulips, Inc., a perfume company, estimated its
At what amount of output does labor change from exhibiting increasing returns to decreasing returns?
2. Smelling of Tulips, Inc., a perfume company, estimated its short-run costs using a U-shaped average variable cost function of the form A VC a+ bQ + CQ 2 and obtained the following results. Total fl[+kl cost (TFC) at S.T. Inc. is $810. Adjusted R Square Intercept 0.945 Coefficients 32.90 -3.81 0.25 Standard Error 2.13 0.47 0.02 t Stat 15.46 -8.16 11.58 P-value 0.0042 0.0000 0.0000 a. b. c. d. What level of output (Q) is associated with the minimum AVC? What is the value of A VC at this minimum? Determine equations for ATC, TC, and MC. Graph one scatterplot of Q vs. TC, and another scatterplot of Q vs. ATC, AVC, and MC. When output is 8, how much is TC, AVC, ATC, and MC? At what amount of output does labor change from exhibiting increasing returns to decreasing returns?
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