A Manager Wishes to Estimate an Average Cost Equation of the Following

question 24

Multiple Choice

A manager wishes to estimate an average cost equation of the following form: $C = a + b Q + c Q ^ { 2 }$ where Q is the level of output.Letting Z = Q² and using least-squares estimation,the manager obtains the following computer output: Given the above information,when output is 40 units,what is average cost?

• A)$200
• B)$280
• C)$360
• D)$480
• E)$520

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Definitions:

Intensive Distribution

A level of distribution density whereby a firm tries to place its products and services in as many outlets as possible.

Administered Vertical Marketing System

A coordinated marketing system among participants at different levels of the supply chain, managed by one dominant member without formal ownership.

Corporate Vertical Marketing System

A coordinated marketing strategy where a single company controls multiple levels of production, distribution, and sales within its supply chain.

Contractual Vertical System

A formal arrangement between firms at different levels of the supply chain, governed by a contract, to coordinate their activities.