-
+1 - 312-224-1615
Get in touch with us
-
support@helpwithassignment.com
Send us an e-mail
Solution Library
Calculate the Average Variable Cost Function
Question
Precision Engineering department has collected data on its average costs of production for the past 12 months. The monthly fixed cost is $4000 per month. The AVC and associated output data are presented below:
| Month | Q | AVC $ |
| Jan | 70 | 375 |
| Feb | 58 | 540 |
| Mar | 160 | 450 |
| Apr | 120 | 255 |
| May | 130 | 138 |
| Jun | 120 | 150 |
| Jul | 10 | 450 |
| Aug | 35 | 350 |
| Sep | 80 | 60 |
| Oct | 110 | 70 |
| Nov | 100 | 90 |
| Dec | 190 | 153 |
(a) Precision Engineering is a perfectly competitive firm. Based on the information above, explain if AVC suggests the functional form: AVC = a + bQ + cQ2. (Draw a scatter diagram of AVC on Y axis and Q on X axis. Fit the scatter diagram with a 2nd degree polynomial trend line.)
(b) Run the appropriate regression to calculate the estimated parameters for the empirical cost function AVC = a + bQ + cQ2. Your answer should include regression output from the statistical software.
(c) Show the level of output at which AVC reach its minimum value, and the minimum value of AVC at its minimum.
(d) Explain the significant point in determining the shut down condition of Precision Engineering department.
(e) Show what is the optimal level of monthly production for Precision Engineering department if the market price of each component is $400 per piece? What is the maximum profit or minimum loss Precision Engineering department can expect to earn?
Summary
The question belongs to Statistics and it is about calculating the functional form of AVC or average variable cost for Precision Engineering department. The data from the department has been used for statistical calculations such as calculation of functional form, estimated parameters for empirical cost function, optimal level of monthly production, etc. have been answered in the solution in detail.
Total Word Count 338
Download Full Solution
WHAT OUR STUDENTS SAY
When I was handed over a data filled excel sheet to analyze as a part of the assignment, then I had no idea what to do and how to approach. I kept on thinking as the deadline kept on getting nearer. Then one of my seniors in college told me about HwA and that is how I first approached them. The experience was fantastic as the experts here found out definitive trends and made sense out of that sheet. They also helped me with the writing the analysis and I got good grades.
Sam Coughman Student
I needed help writing the solution to the assignment on how to derive the equilibrium constant expression for a protein crosslinking reaction using mass spectrometry. But i just did not know where to get the relevant solution material. Thanks to the chemical equilibrium assignment expert at HwA I was able to write the assignment with all the relevant research work and also get the accurate solution.
Karen Zimmerman Student
I thank TheReliableTutor.com for helping me to complete my biochemistry assignment on time. I was given assignment on DNA polymerases which is very interesting if you know basic concepts of it. The experts taught me right from the basics and helped me to get good grades in my assignment. Thanks for the support guys..!!!
Suzene Student
I was totally unaware of what exactly needed to be written in the marketing plan assignment, based on the . I needed to first get an approval from my professor about the hypothetical business and a region where it needs to be promoted. When I approached TheReliableTutor I got relieved as they provided me with certain alternatives, as they are well aware of the regions of Singapore and assured me that their marketing assignment experts can care of anything my professor approves. It is needless to say that I got an A+ in the marketing plan assignment and many other assignments going forward.
Jun Hao Student
I started taking their help while pursuing my managerial economics course in New York. So far it is a wonderful experience as unlike most of the online tutoring services, the econ tutors at HwA has industry experience and that enhances the quality of the economics papers.
Liam Wickham Student
Comments
this is a very good website
I have 50 questions for the same test your page is showing only 28
hi can you please help or guide me to answer my assignments. thanks
hi can anyone help or guide me to my assignments. thanks
This solution is perfect ...thanks
Hello Allison,I love the 2nd image that you did! I also, had never heard of SumoPaint, is something that I will have to exolpre a bit! I understand completely the 52 (or so) youtube videos that you probably watched. Sometimes they have what you want, sometimes they don't! However, it is always satisfying when you are able to produce something that you have taught yourself. Great job!Debra 0 likes
Perfect bank of solution.
great !
thanks for the quick response. the solution looks good. :)
thnx for the answer. it was perfect. just the way i wanted it.
works fine.