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Solve clearly The chief economist for the Epsilon Corporation, a small manufacturing company that produces automotive glass, estimates the following average variable cost function: AVC
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The chief economist for the Epsilon Corporation, a small manufacturing company that produces automotive glass, estimates the following average variable cost function: AVC = a+bQ+coz Where AVC = dollars per windshield, and Q = number of windshields produced each month. Total fixed cost is $100,000. The following results were obtained: DEPENDENT VARIABLE: AVC R-SQUARE F-RATIO P-VALUE ON F OBSERVATIONS: 16 0.9000 58.50 0.0001 PARAMETER STANDARD VARIABLE ESTIMATE ERROR T-RATIO P-VALUE INTERCEPT 125.00 42.00 3.00 0.0102 Q -0.24 0.04 -6.00 0.0001 Q2 0.0003 0.0001 3.00 0.0102 a. Determine whether the estimate values of the coefficients indicate a U-shaped AVC curve at the 5 percent level of significance. b. Assuming Epsilon produces 1,000 windshields a month, calculate their estimated marginal cost, total variable cost, and total cost. c. AVC reaches its minimum value at Qm = d. Minimum AVC = $Step by Step Solution
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