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Palm Products Company has collected data on its average variable costs of production for the past 12 months. The costs have been adjusted for...

Palm Products Company has collected data on its average variable costs of production for the past 12 months. The costs have been adjusted for inflation by deflating with an appropriate price index. The AVC and associated output data are presented below:

obs Q AVC obs Q AVC
1 22 $208 7 45 $172
2 31 202 8 45 158
3 31 206 9 45 173
4 25 214 10 62 170
5 41 174 11 62 152
6 41 203 12 70 175

Run the appropriate regression (below) to estimate the parameters for the empirical cost
function:
AVC = a + bQ + cQ2
(Post your computer output here)

a. Using a 10 percent significance level test for the statistical significance of the parameters obtained in a, then discuss the suitability (considering their algebraic signs) of the parameter estimates.

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Dear Student, Please check the attached solutions of... View the full answer

obs Q AVC obs Q AVC.doc

obs Q AVC obs Q AVC
1 22 $208 7 45 $172
2 31 202 8 45 158
3 31 206 9 45 173
4 25 214 10 62 170
5 41 174 11 62 152
6 41 203 12 70 175
Run the appropriate regression (below) to estimate the...

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