a)
To evaluate the variables that are statistically significant in explaining variations in the average operating expense ratio
a)
Explanation of Solution
In statistics the t-statistics is the ratio of the departure of a parameter's estimated value from its hypothesized value to its standard error. It is used via the Student's t-test in hypothesis testing. For a T test the T-statistic is used to determine whether the null hypothesis should be accepted or rejected.
These variables are tested at the statistically significant level of 5% that is 0.5.
Variable is significant, that is t value is larger than 0.025; the value of 0.025 is around 2. All the t values of variable are greater than the 2.00; hence, all values are significant in explaining the cause and effect relationship.
Introduction: The Operating Expense Ratio (OER) is a measure of the cost of operating a piece of property compared with the property’s revenue. It is calculated by dividing the operating expense (minus
c)
To evaluate the conclusion about the existence of economies or diseconomies of scale in savings and loan associations in the northwest
c)
Explanation of Solution
The cost analysis is concerned with determining the money value of inputs (labor, raw materials), referred to as the total cost of production which helps to determine the optimum production level.
It can be concluded here that cost and output relationship show that the shape of cost is U shaped, U shape of cost curve denotes that cost decreases up to the certain point and economies of scale ensues. After the certain level of output, economies of scale changes into diseconomies of scale.
Introduction: Economies of scale are cost advantages that businesses reap when production is successful. By rising production and reducing costs, businesses can achieve economies of scale. It is because it spreads prices over a larger variety of products. The costs may be fixed as well as variable.
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Chapter 9 Solutions
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
- Managerial Economics: Applications, Strategies an...EconomicsISBN:9781305506381Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. HarrisPublisher:Cengage LearningManagerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning