I need help with #3

You work in the research department of a large manufacturing firm of computer discs. You are asked to construct a linear equation which is used estimate the firms total variable costs. TVC linear function is constructed as a function of wages, W, and output, Q. You estimate the following regression equation using 64 quarters of data, where: TVCQW=totalvariablecostsofproduction=thefirmsOutputlevel=thewageratetolabor The estimated equation takes he following form: a. Suppose W=$10, derive the AVC function and the MC function. b. What are the shapes of the AVC and MC functions? (you can use excel to draw the 2 graphs). c. Explain why you would choose a linear function to estimate the equation rather than a quadratic equation. d. What the linear form of the TVC estimated equation the correct choice? Explain. Upper management was so pleased with your work on problem #2 they gave you a new assignment. A previous study found the following equation for TVC and set TFC=$100. TVC=60Q12Q2+Q3TFC=$100 The price of the software is $60 /unit (P=MR). Management asks you to find the following given the information above a. Calculate the AVC and MC functions for the firm. Additionally, determine where the AVC curve intersects the MC functions (ie. where they intersect). See equations 8.22, 8.23 and 8.24 on page 356 b. Determine the breakeven output level and the output the firm maximizes total profit. A firm will maximize profits ( ) by finding the output level(s) at which MR=MC. Management provides you with some new information. If the firm purchases a new state of technology in production the TC function is described by the following equation: TC=50+20Q+2W+3r Where w= wage rate and r= rental price of capital. c. Assuming W=$20 /unit and r=$10 /unit, what is the new AVC function and MC function. Graph the 2 functions on the same Excel sheet. d. Should you recommend adopting the new state of technology? If it does, determine the profit maximizing level of output assuming the price, P=$60 /unit (note P=MR& the profit maximizing output level is the Q at which MR=MC ). You work in the research department of a large manufacturing firm of computer discs. You are asked to construct a linear equation which is used estimate the firms total variable costs. TVC linear function is constructed as a function of wages, W, and output, Q. You estimate the following regression equation using 64 quarters of data, where: TVCQW=totalvariablecostsofproduction=thefirmsOutputlevel=thewageratetolabor The estimated equation takes he following form: a. Suppose W=$10, derive the AVC function and the MC function. b. What are the shapes of the AVC and MC functions? (you can use excel to draw the 2 graphs). c. Explain why you would choose a linear function to estimate the equation rather than a quadratic equation. d. What the linear form of the TVC estimated equation the correct choice? Explain. Upper management was so pleased with your work on problem #2 they gave you a new assignment. A previous study found the following equation for TVC and set TFC=$100. TVC=60Q12Q2+Q3TFC=$100 The price of the software is $60 /unit (P=MR). Management asks you to find the following given the information above a. Calculate the AVC and MC functions for the firm. Additionally, determine where the AVC curve intersects the MC functions (ie. where they intersect). See equations 8.22, 8.23 and 8.24 on page 356 b. Determine the breakeven output level and the output the firm maximizes total profit. A firm will maximize profits ( ) by finding the output level(s) at which MR=MC. Management provides you with some new information. If the firm purchases a new state of technology in production the TC function is described by the following equation: TC=50+20Q+2W+3r Where w= wage rate and r= rental price of capital. c. Assuming W=$20 /unit and r=$10 /unit, what is the new AVC function and MC function. Graph the 2 functions on the same Excel sheet. d. Should you recommend adopting the new state of technology? If it does, determine the profit maximizing level of output assuming the price, P=$60 /unit (note P=MR& the profit maximizing output level is the Q at which MR=MC )