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A firm estimates its cubic production function of the form Q = AL^3 + BL^2 and obtains the following estimation results: A. What are the estimated total, average, and marginal product functions? B. At what level of labor usage is average product at its maximum?

A firm estimates its cubic production function of the form Q = AL^3 + BL^2 and obtains the following estimation results: A. What are the estimated total, average, and marginal product functions? B. At what level of labor usage is average product at its maximum?

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
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  1. A firm estimates its cubic production function of the form

Q = AL^3 + BL^2

and obtains the following estimation results:

A. What are the estimated total, average, and marginal product functions?

B. At what level of labor usage is average product at its maximum?

DEPENDENT VARIABLE: Q OBSERVATIONS: 27 VARIABLE L3 L2 R-SQUARE 0.7972 PARAMETER ESTIMATE -0.00160 0.480 F-RATIO 98.256 STANDARD ERROR 0.000750 0.37510 P-VALUE ON F 0.0001 T-RATIO -2.13 1.28 P-VALUE 0.0429 0.2124
Transcribed Image Text:DEPENDENT VARIABLE: Q OBSERVATIONS: 27 VARIABLE L3 L2 R-SQUARE 0.7972 PARAMETER ESTIMATE -0.00160 0.480 F-RATIO 98.256 STANDARD ERROR 0.000750 0.37510 P-VALUE ON F 0.0001 T-RATIO -2.13 1.28 P-VALUE 0.0429 0.2124
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