Suppose an industry has 100 firms, each with a supply curve P = 50 + 10Q . Furthermore, suppose the market demand curve is given
1 answer:
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Answer and explanation:
1. The scatter plot is attached as an image below
2(a).
Variable cost per section is shown by the slope while
fixed cost is shown by the intercept\
The simple linear regression is as given below
<u>x y xy x²</u>
7 13,500 94500 49
3 8000 24000 9
6 12000 72000 36
2 6500 13000 4
<u>4 10000 40000 16</u>
<u>22 50000 243500 114</u>
<u />
Regression Equation: y = a + bx where
x = number of sections offered
y = total cost
a = is the intercept point of regression line and y-axis
b = slope of regression line
N = 5, ∑x = 22, ∑y = 50000
∑xy = 243500, ∑x² = 114, (∑x)²=484
Slope(b) = <u>∑xy - ∑x∑y </u>
∑x²- (∑x)²
= 1366.28 (variable cost per section)
Intercept (a) = <u>∑y - b∑x</u>
N
= 3988.37 (fixed cost per section)
2(b).
Writing the expression in the form of an equation
y = a + bx ⇒ y = 3988 + 1366x
3(a).
Expected Total Cost is calculated by putting the value of x = 10 in the above equation,
Expected Total Cost, y = 3988.37 + 1366.28 × 10 = 17651
