Straker Industries estimated its short-run costs using a U-shaped average variable cost function of the formAVC = a + bQ + cQ2and obtained the following results. Total fixed cost (TFC) at Straker Industries is $1,000. DEPENDENT VARIABLE:AVCR-SQUAREF-RATIOP-VALUE ON FOBSERVATIONS:350.8713108.30.0001VARIABLE PARAMETER ESTIMATESTANDARD ERRORT-RATIOP-VALUEINTERCEPT 43.4013.803.140.0036Q −2.800.90−3.110.0039Q2 0.200.054.000.0004 If Straker Industries produces 20 units of output, what is estimated short-run marginal cost (SMC)?a.$1,348b.$463.20c.$171.40d.$2,348

Total cost (TC) represents the complete expense incurred by a firm or organization in the production…

Answered: Straker Industries estimated its…

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter7: Proudction Costs

Section: Chapter Questions

Problem 17SQ

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Straker Industries estimated its short-run costs using a U-shaped average variable cost function of the form

AVC = a + bQ + cQ²

and obtained the following results. Total fixed cost (TFC) at Straker Industries is $1,000.

DEPENDENT VARIABLE:	AVC	R-SQUARE	F-RATIO	P-VALUE ON F
OBSERVATIONS:	35	0.8713	108.3	0.0001
VARIABLE		PARAMETER ESTIMATE	STANDARD ERROR	T-RATIO	P-VALUE
INTERCEPT		43.40	13.80	3.14	0.0036
Q		−2.80	0.90	−3.11	0.0039
Q2		0.20	0.05	4.00	0.0004

If Straker Industries produces 20 units of output, what is estimated short-run marginal cost (SMC)?

$1,348

$463.20

$171.40

$2,348

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