Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN: 9781305506381
Author: James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 4A, Problem 2E
a
To determine
To find:Estimation of alpha, beta and r-squared variables.
b)
To determine
To know: A linear regression model using double-logarithmic transformation.
c)
To determine
To find:Estimation of alpha, beta and r-squared variables.
d)
To determine
To know:
Model appeared to be better fit.
e)
To determine
To know:Implication for the value of r-square variable obtain in part d
f)
To determine
To know:Transformation of variables to get better fit.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
A company produces and sells luxury goods and is able to control the demand for the product by varying the selling price.
The relationship between price and demand is found to be:
p=10-(42/D^2)+2Dwhere p is the price per unit in million dollars and D is the demand per year. The company is seeking to maximize its profit. The fixed cost is $59 million per year and the variable cost is $25 million per unit. The production capacity is 42 units per year, and the company produces at least 1 unit per month.a) Derive how to find the number of units that should be produced annually to maximize profit.b) What is the maximum profit per year?c) What is the annual breakeven point?d)What is the company’s range of profitable output per year?
A company produces and sells luxury goods and is able to control the demand for the product by varying the selling price.
The relationship between price and demand is found to be:
p=10-(42/D^2)+2Dwhere p is the price per unit in million dollars and D is the demand per year. The company is seeking to maximize its profit. The fixed cost is $59 million per year and the variable cost is $25 million per unit. The production capacity is 42 units per year, and the company produces at least 1 unit per month.
1) What is the company’s range of profitable output per year?
A clothing manufacturer makes trousers,skirts and blouses.Each trouser requires 20 minutes of cutting time,60 minutes of sewing time and 5 minutes of packaging time.Each skirt requires 15 minutes of cutting time,30 minutes of sewing time and 12 minutes of packaging time.Each blouse requires 10 minutes of cutting time, 24 minutes of sewing time and 6 minutes of packaging time. The amount of time available for cutting,sewing and packaging is 115 hours, 280 hours and 65 hours respectively.Determine how many of each type of clothing should be made to use all available labour hours.
Chapter 4A Solutions
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
Knowledge Booster
Similar questions
- A clothing manufacturer makes trousers, skirts and blouses. Each trouser requires 20 minutes of cutting time, 60 minutes of sewing time and 5 minutes of packaging time. Each skirt requires 15 minutes of cutting time, 30 minutes of sewing time and 12 minutes of packaging time. Each blouse requires 10 minutes of cutting time, 24 minutes of sewing time and 6 minutes of packaging time. The amount of time available for cutting, sewing and packaging is 115 hours, 280 hours and 65 hours respectively. Using either the Inverse Method or the Cramer’s Rule, determine how many of each type of clothing should be made to use all available labor hours?arrow_forwardHau Lee Furniture, Inc., spends 60% of its sales dollars in the supply chain and has a current gross profit of $10,000. Hau wishes to increase gross profit by $5,000 (50%). He would like to compare two strategies: reducing material costs vs. increasing sales. The current material costs and production costs are 60% and 20%, respectively, of sales dollars, with fixed cost at a constant $10,000. Analysis indicates that an improvement in the supply chain that would reduce material costs by 8.3% ($5,000/$60,000) would produce a 50% net profit gain for Hau, whereas a much larger 25% increase in sales ($25,000/$100,000) would be required to produce the same result. Now Hau finds its current profit of $10,000 inadequate. The bank is insisting on an improved profit picture prior to approval of a loan for some new equipment. Hau would like to improve the profit line to $25,000 so he can obtain the bank’s approval for the loanWhat percentage improvement is needed in the supply chain strategy for…arrow_forwardQ5) A firm is planning to manufacture a new product. The sales department estimates that the quantity that can be sold depends on the selling price. As the selling price is increased, the quantity that can be sold decreases. Numerically they estimate: P = $35.00 - 0.02Q where P =selling price per unit Q = quantity sold per year On the other hand, the management estimates that the average cost of manufacturing and selling the product will decrease as the quantity sold increases. They estimate C = $4.00Q + $8000 where C = cost to produce and sell Q per year The firm's management wishes to produce and sell the product at the rate that will maximize profit, that is, where income minus cost will be a maximum. What quantity should the decision makers plan to produce and sell each year?arrow_forward
- Adidas produces shoes for sale at Macys, JC Penny and Footlocker. The company makes a few different design of shoes from high-end to low end. The manager, Eric, is interested in using a Level Aggregate Plan for production. Inventories and back orders will be used to handle demand fluctuation. As an Operations Manager, you have been asked to develop an Aggregate Plan. Use the data provided below to answer this questions. Cost Data Regular-time labor cost (hrs) 11 Overtime labor cost (hrs) 18 Subcontracting cost per unit (labor only) 84 Holding cost per unit per period 12 Back-order cost per unit per employee 21 Hiring cost per employees 600 Firing cost per employees 450 Capacity Data Beginning workforce (employees) 215 Beginning inventory in units 2000 Labor standard per units in hrs 6 Regular time available per period (hrs) 160 Overtime available per period (hrs) 32 Subcontracting maximum per period in…arrow_forwardThe 24-Hour Mart operates a chain of supermarkets. Its best-selling soft drink is Fruitslice. Demand (D) in April for Fruitslice at its Regina supermarket is estimated to be 7,200 cases (24 cans in each case). In March, the Regina supermarket estimated the ordering costs per purchase order (P) for Fruitslice to be $36. The carrying costs (C) of each case of Fruitslice in inventory for a month were estimated to be $1.20. At the end of March, the Regina 24-Hour Mart reestimated its carrying costs to be 1.80 per case per month to take into account an increase in warehouse-related costs. (Click the icon to view additional information.) Requirements 1. Calculate the economic order quantity in April for Fruitslice. Use the EOQ model, and assume in turn that a. D=7,200; P= $36; C = $1.20 b. D=7,200; P= $36; C = 1.80 c. D=7,200; P= $6; C = 1.80 2. How does your answer to requirement 1 give insight into the retailer's movement toward JIT purchasing policies? Data table × (Round your answer up…arrow_forwardThree equations for the course average of ECON3210 are estimated as follows. The first equation is for men, and the second equation is for women. The third equation combines men and women. Standard errors are in parentheses. Ym Yw y = = 20.52 + 13.60X₁ + 0.67X2 +0.058X3 (3.72) (0.94) (0.15) (0.01) 13.79 +11.89X₁ + 1.03X₂ +0.061X3 (3.72) (0.94) (0.15) (0.02) n=86 SSR = 1000 n=90 SSR = 1100 15.60 +12.82X₁ + 0.838X₂ +0.060X3 SSR=3300 (3.72) (0.94) (0.15) Where Ym = course average for men, yw course average for women, x₁ = overall GPA, X₂= ACT score, X3=Hours of study per week etc. You are to conduct Chow test that the regression equations are same for men and women. Compute the test statistic.arrow_forward
- The O'Neill Shoe Manufacturing Company will produce a special-style shoe if the order size is large enough to provide a reasonable profit. For each special-style order, the company incurs a fixed cost of $2,625 for the production setup. The variable cost is $55 per pair, and each pair sells for $80. (a) Let x indicate the number of pairs of shoes produced. Develop a mathematical model for the total cost (C) of producing x pairs of shoes. C = (b) Let P indicate the total profit. Develop a mathematical model for the total profit realized from an order for x pairs of shoes. P = (c) How large must the shoe order be before O'Neill will break even? x =arrow_forwardWhat are the properties of Ordinary Least Squares (OLS) estimators in basic econometrics? Discuss. (Maximum 250 words)arrow_forwardAn important application of regression analysis in accounting is in the estimation of cost. By collecting data on volume and cost and using the least squares method to develop an estimated regression equation relating volume and cost, an accountant can estimate the cost associated with a particular manufacturing volume. Consider the following sample of production volumes and total cost data for a manufacturing operation. Production Volume (units) Total Cost ($) 400 4,000 450 5,000 550 5,400 600 5,900 700 6,400 750 7,000 a. Use these data to develop an estimated regression equation that could be used to predict the total cost for a given production volume. Do not round intermediate calculations. Compute b1 and bo (to 1 decimal). bị bo Complete the estimated regression equation (to 1 decimal). Do not round intermediate calculations b. What is the variable cost per unit produced (to 2 decimal)? Do not round intermediate calculations 2$ c. Compute the coefficient of determination (to 3…arrow_forward
- A strawberry growing company is deciding its production and sale plan for the national and international markets.The sale price for each ton of strawberry depends on the quantity offered in the market. If x1 tons is offered for the domestic market, the sale price will be (30 - x1) CU / ton, while if x2 tons is offered for the international market, the sale price will be (40 - x2) CU / ton.The cost for each ton of strawberry for the domestic market is 10 MUs, while for the international market it is 15 MUs.The company has the capacity to produce up to 10 tons of strawberries for sale and, according to SAG restrictions, it must dedicate at least 10% of its production to the international market.For technical production reasons, the company must additionally satisfy the following restriction: x12 + x22 ≤64.a) Raise the NLP model that allows maximizing the net profit for the companyb) State the KKT conditions for the problem and indicate whether they are necessary and / or sufficient.c)…arrow_forwardA strawberry growing company is deciding its production and sale plan for the national and international markets.The sale price for each ton of strawberry depends on the quantity offered in the market. If x1 tons is offered for the domestic market, the sale price will be (30 - x1) CU / ton, while if x2 tons is offered for the international market, the sale price will be (40 - x2) CU / ton.The cost for each ton of strawberry for the domestic market is 10 MU, while for the international market it is 15 MU.The company has the capacity to produce up to 10 tons of strawberries for sale and according to SAG restrictions, it must dedicate at least 10% of production to the international market.For technical production reasons, the company must additionally satisfy the following restriction: x12 + x22 ≤64.d) There is the option of buying new machinery to increase the production capacity of the company. In what range should the new machine increase production capacity to suit the company? How…arrow_forwardYou have been hired as a marketing consultant to Johannesburg Burger Supply, Inc., and you wish to come up with a unit price for its hamburgers in order to maximize its weekly revenue. To make life as simple as possible, you assume that the demand equation for Johannesburg hamburgers is linear. (a) Your market studies reveal the following sales figures: When the price is set at $2.00 per hamburger, the sales amount to 6000 per week, but when the price is set at $4.00 per hamburger, the sales drop to zero. Use these data to find the linear demand function q(p), where p is the price per hamburger and q is the number of hamburgers they sell at that price per week. q(p) = (b) Find the price elasticity of demand. E(p) = (c) When you raise the price by 1% from $2 per hamburger, the demand decreases Demand is of unit elasticity. v by X %.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Managerial Economics: Applications, Strategies an...EconomicsISBN:9781305506381Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. HarrisPublisher:Cengage Learning
Managerial Economics: Applications, Strategies an...
Economics
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:Cengage Learning