Refer to the Cost Regression for Straker Industries Shown Below $$A V C = a + b Q + c Q ^ { 2 }$$

question 52

Multiple Choice

Refer to the cost regression for Straker Industries shown below.
Straker Industries estimated its short-run costs using a U-shaped average variable cost function of the form

$$A V C = a + b Q + c Q ^ { 2 }$$
and obtained the following results. Total fixed cost (TFC) at Straker Industries is $1,000.
$$\begin{array} { r l l l l l } \text { DEPENDENTVARIAELE: } & \text { AVC } & \text { R-SQUARE } & \text { F-RATIO } & \text { P-VALUE ON F } \\\text { OESERVATIONS: } & \text { 35 } & \mathbf { 0 . 8 7 1 3 } & 108.3 & \mathbf { 0 . 0 0 0 1 } & \\& & \begin{array} { l } \text { PARAMETER }\end{array} & \text { STANDARD } & & \\\text { VARIAELE } & & \text { ESTIMATE } & \text { ERROR } & \text { T-RATIO } & \text { P-VALUE } \\\text { INTERCEPT } & & 43.40 & 13.80 & \mathbf { 3 . 1 4 } & \mathbf { 0 . 0 0 3 6 } \\\text { Q } & & - \mathbf { 2 . 8 0 } & \mathbf { 0 . 9 0 } & - \mathbf { 3 . 1 1 } & \mathbf { 0 . 0 0 3 9 } \\\text { Q2 } & & \mathbf { 0 . 2 0 } & \mathbf { 0 . 0 5 } & 4.00 & \mathbf { 0 . 0 0 0 4 }\end{array}$$
-The estimated short-run marginal cost function (SMC) at Straker Industries is:

• A) \(S M C = 43.4 Q - 1.4 Q ^ { 2 } + 0.07 Q ^ { 3 }\)
• B) \(S M C = 43.4 - 1.4 Q + 0.07 Q ^ { 2 }\)
• C) \(S M C = 43.4 Q - 5.6 Q ^ { 2 } + 0.6 Q ^ { 3 }\)
• D) \(SM C = 43.4 - 5.6 Q + 0.6 Q ^ { 2 }\)

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Definitions:

Liver

A large, vital organ in vertebrates that performs a wide variety of functions, including detoxification, protein synthesis, and production of biochemicals necessary for digestion.

Sigmoid Colon

The part of the large intestine closest to the rectum and anus, curved like an "S", involved in the digestive process.

Ascending Colon

The first part of the colon that ascends from the cecum on the right side of the abdomen, absorbing fluids and nutrients from digested foods.

Sampling Distribution

The distribution of probabilities for a statistic obtained from a random sample.