The Following Table Shows the Annual Revenues (In Millions of Dollars)

question 8

Multiple Choice

The following table shows the annual revenues (in millions of dollars) of a pharmaceutical company over the period 1990-2011. The scatterplot indicates that the annual revenues have an increasing trend. Linear, exponential, quadratic, and cubic models were fit to the data starting with t = 1, and the following output was generated. Which of the following is a revenue forecast for 2012 found by the exponential trend equation?

• A) About 2 billion and 334 million dollars
• B) About 2 billion and 189 million dollars
• C) About 2 billion and 141 million dollars
• D) About 2 billion and 34 million dollars

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Definitions:

Fixed Input

A factor of production that cannot be easily increased or decreased in the short term, such as land or machinery.

Short Run

A period in which at least one input in the production process is fixed, limiting the ability of the firm to adjust production levels.

Variable Costs

Outlays that shift in tandem with the quantity of goods produced.

Long Run

A period sufficient for all inputs and production processes to be adjusted, including changing the scale of production facilities.