You have been presented with the following cost data and asked to fit a statistical cost function:
Quantity Total Cost
10 .................................... 104.0
20 .................................... 107.0
30 .................................... 109.0
40 .................................... 111.5
50 .................................... 114.5
60 .................................... 118.0
70 .................................... 123.0
80 .................................... 128.5
90 .................................... 137.0
100 ................................... 150.0
a. Plot the data on a graph, and draw a freehand curve that best fits the data.
b. Fit three possible statistical cost functions to the data. Use straight-line, quadratic, and cubic formulas. Do the results confirm the curve you drew in a?
c. Discuss the statistical results you obtained in b. Include in your discussion R2, the coefficients and the statistical significance of the coefficients.
d. If the data represent 10 months of production for one plant of a specific company, would vim consider this to be a short-run analysis?
e. How would your answer to part c/change if you were told that the data represent 10 different plants during a particular month of the year?