# Calculate the Empirical Cost Function with Regression Analysis

Question

Precision Engineering department has collected data on its average costs of production for the past 12 months. The monthly fixed cost is \$4000 per month. The AVC and associated output data are presented below:

 Month Q AVC \$ Jan 70 375 Feb 58 540 Mar 160 450 Apr 120 255 May 130 138 Jun 120 150 Jul 10 450 Aug 35 350 Sep 80 60 Oct 110 70 Nov 100 90 Dec 190 153

Run the appropriate regression to calculate the estimated parameters for the empirical cost function AVC = a + bQ + cQ2. The answer should include regression output from the statistical software.

Summary

The question belongs to Statistics and it is about calculating the empirical cost function AVC = a + bQ + cQ2 by running the appropriate regression analysis.

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