A financial analyst has reported the following information about Shangui Corporationâ€TMs cost and production structure:
Year
|
Total Cost (TC) ($10,000)
|
Quantity Produced (Q) (Unit)
|
2009
|
20
|
50
|
2010
|
22
|
100
|
2011
|
24
|
120
|
2012
|
26
|
130
|
Use Ordinary Least Squares Method (OLS) to estimate the ABC Corporationâ€TMs total cost function; that is, TC = β + β Q ;
What is ABC Coâ€TMs marginal cost?
What is ABC Coâ€TMs fixed cost?
Calculate scale elasticity at the mean of the data;
In order to reduce unit cost would you recommend an increase or a decrease in total production? Why?