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

question 34

Multiple Choice

A manager wishes to estimate an average cost equation of the following form:
$A manager wishes to estimate an average cost equation of the following form: where Q is the level of output. Letting Z = Q<sup>2</sup> and using least-squares estimation, the manager obtains the following computer output: \begin{array} { | c l l l l l | } \hline \text { DEPENDENT VARIABLE: } & \text { C } & \text { R-SQUARE } & \text { F-RATIO } & \text { P-VALUE ON F } \\ \text { OBSERVATIONS: } & 28 & 0.7679 & 26.47 & 0.0001 & \\ \text { VARIABLE } & \begin{array} { l } \text { PARAMETER } \\ \text { ESTIMATE } \end{array} & \begin{array} { l } \text { STANDARD } \\ \text { ERROR } \end{array}& \text { T-RATIO } & \text { P-VALUE } \\ \text { INTERCEPT }& 200 & 38.00 & 5.26 & 0.0001 \\ \text { Q } & - 12.00 & 4.36 & - 2.75 & 0.0111 \\ \text { Z } & 0.50 & 0.16 & 3.13 & 0.0046 \\ \hline \end{array} -Which of the parameter estimates are statistically significant at the 1% significance level? A) All the parameter estimates are statistically significant. B) All parameter estimates except \hat { b } are statistically significant. C) \hat { a } is not statistically significant, but all the rest of the parameter estimates are significant. D) \hat { c } is not statistically significant, but all the rest of the parameter estimates are significant.$
where Q is the level of output. Letting Z = Q² and using least-squares estimation, the manager obtains the following computer output:

$\begin{array} { | c l l l l l | } \hline \text { DEPENDENT VARIABLE: } & \text { C } & \text { R-SQUARE } & \text { F-RATIO } & \text { P-VALUE ON F } \\\text { OBSERVATIONS: } & 28 & 0.7679 & 26.47 & 0.0001 & \\ \text { VARIABLE } & \begin{array} { l } \text { PARAMETER } \\\text { ESTIMATE }\end{array} & \begin{array} { l } \text { STANDARD } \\\text { ERROR }\end{array}& \text { T-RATIO } & \text { P-VALUE } \\\text { INTERCEPT }& 200 & 38.00 & 5.26 & 0.0001 \\\text { Q } & - 12.00 & 4.36 & - 2.75 & 0.0111 \\ \text { Z } & 0.50 & 0.16 & 3.13 & 0.0046 \\\hline\end{array}$
-Which of the parameter estimates are statistically significant at the 1% significance level?

Definitions:

Rockefeller

Refers to John D. Rockefeller, an American industrialist and philanthropist who played a significant role in the early petroleum industry and was considered one of the wealthiest individuals in history.

Kinsey

Refers to Alfred Kinsey, an American biologist and sexologist who founded the Institute for Sex Research at Indiana University and is known for his research on human sexuality.

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