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ECO404 Assignment Solution spring 2017

CASE 1:
Surgicon Pvt. Ltd is one of the leading surgical companies that manufactures fine quality of surgical instruments and accessories in Pakistan and operates in the highly competitive surgical instrument industry. Suppose Price for its surgical scissors is stable at Rs.70 each. This means that price (P) = Marginal revenue (MR) = 70 in this market. Engineering estimates indicate that relevant total cost function for the surgical instrument is given as:
TC = 80,000 + 10Q + 0.003Q2

REQUIREMENTS:
Keeping in view the above information and by using Formulas and Stepwise Procedure:
A. Find marginal cost (MC) function
B. Find average cost (AC) function
C. Calculate the output level (Q) that will maximize profit of the company
D. Calculate maximum Profit of the company
CASE 2:
Suppose manager of Surgicon Pvt. Ltd wants to determine the relationship between the firm’s independent variable (X) and its dependent variable (Y). The manager wants to test the hypothesis that the relationship between these two variables exists statistically significant or not? And, furthermore, wants to estimate the strength of the relationship. Some information is given below:
Σ (Yt – t) 2 = 75.3820 n = 10 k = 2
Σ (Xt – )2 = 20 = 3.53
REQUIREMENTS:
Using the above information and by using Formulas and Stepwise Procedure:
A. Calculate the value of t-statistics.
B. Check its significance against critical value of t at 5% level of significance i.e. 2.306.

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