# Regression - Managerial Economics

Managerial Economics

Table: Production Function: Soft Drink Bottling

Total Product Labor Capital

97 15 1.00

98 17 1.00

104 20 1.00

120 22 1.00

136 22 1.25

129 25 1.25

145 30 1.25

170 32 1.25

181 35 1.25

166 30 1.50

175 35 1.50

190 38 1.50

212 42 1.50

220 44 1.50

207 45 1.50

228 44 1.75

226 47 1.75

240 52 1.75

270 55 1.75

280 58 1.75

Summary Output

Regression Statistics

R Square 0.980965846

Adjusted R Square 0.978726534

Standard Error 0.020818585

Observations 20

Coefficients Standard Error t Stat

Intercept 1.1800154 0.096022924 12.288892

X Variable 1 0.6643702 0.075371367 8.8146228

X Variable 2 0.3214714 0.147006777 2.1867796

A cross-sectional sample of 20 soft drink bottling plants has been selected. Only two independent variables are used: 1. Number of workers and 2. Plant size. Plants range from 1 to 1.75. based on a size and capacity measure. Production, the dependent variable, is stated in terms of gallons of product shipped.

Use the information above to do the following assignment:

Q L K LN (Q) LN(L) LN(K)

Original data for Q, L, & K Transformed for LN (Q), LN (L), & LN (K)

from table above here data here

The raw data must be transformed into natural log, not into log of base 10 as in textbook, to estimate the Cobb-Douglas production function. Use Excel function ln (number) to transform the observations into natural log to create three new columns for the transformed data and the associated variables starting column E.

Note: Q = output in gallons, L = labor in 1000 workers, and K = capital in $1000.

1. Write the multiplicative Cobb-Douglas production function and then show the natural log transformed Cobb-Douglas estimating equation.

2. a. Show the estimated Cobb-Douglas production function.

b. Then test whether the estimated coefficients of capital and labor or statistically significant at the 5% level by using either the t-test or the p-value.

c. What conclusion can you draw about the relationship between capital and output and between labor and output?

3. Determine the percentage of the variation in output that is explained by the regression equation.

4. Determine the labor and capital production elasiticities and give an economic interpretation of each value.

5. Determine whether this production function exhibits increasing, decreasing, or constant returns to scale. (Ignore statistical significance when explaining).

Use Excel for data and regression outputs.

Use Word document for answering questions and any applicable computations in report form.

https://brainmass.com/statistics/regression-analysis/237510

#### Solution Preview

I am attaching the information for it. I have to have Excel data and regression and then a Word document in report form showing the answers to the questions and any applicable computations

show all work

Use Excel for data and regression outputs.

Use Word document for answering questions and any applicable computations in report form.

Managerial Economics

Table: Production Function: Soft Drink Bottling

Total Product Labor Capital

97 15 1.00

98 17 1.00

104 20 1.00

120 22 1.00

136 22 1.25

129 25 1.25

145 30 1.25

170 32 1.25

181 35 1.25

166 30 1.50

175 35 1.50

190 38 1.50

212 ...

#### Solution Summary

The solution examines managerial economics

Regression analysis for Managerial Economics Assignment.

Managerial Economics Assignment

Below are data on quantity produced at a group of shirt manufacturing plants. Each plant also reports its total cost. This exercise tests your knowledge of empirically verifying economic theory of short-run production cost.

a. What is the theoretical regression equation of the short-run total cost based on the data? Make sure you define the variables.

b. Empirically estimate the short-run total cost above, and then write the estimated cost equation. Indicate the value of the total fixed cost and of the marginal cost from the estimated cost equation.

c. Forecast total cost for a plant producing 28 (000s) units.

Quantity Total Cost

(000s) ($000s)

21.80 $171.11

20.81 $158.40

20.96 $165.24

19.73 $161.18

16.65 $137.53

20.54 $165.39

22.24 $171.58

19.44 $153.54

17.24 $142.82

18.67 $153.43

19.78 $143.63

18.86 $148.53

17.58 $147.89

26.64 $203.29

22.16 $176.69

17.41 $149.36

22.02 $176.38

26.39 $194.31

26.71 $196.37

23.77 $177.11

17.42 $136.14

21.76 $166.04

23.97 $180.82

21.01 $159.99

26.34 $187.62