9. Some project managers wish to model how output is related to material and labour inputs. They develop the following model for 44 production runs and estimate the following:
Y = 13.13 + 10.1X2 + 120X3 -0.2X32
The standard errors are se(51) = 7.9, seb2)=3.2, seb3) = 0.11, se(b4)=0.002.
X2 = the cost per unit of the primary material input
X3 = the number of labour hours.
For a fixed value of X2, what is the marginal effect of a 1 hour increase in labour hours on output when the company is employing 200 hours of labour per day?
A. The marginal effect is an increase in output of approximately 80 units of output.
B. The marginal effect is an increase in output of approximately 40 units of output.
C. The marginal effect of an additional unit of labour cannot be calculated when the relationship is quadratic because the marginal effect of an additional unit of labour changes with the level of labour employed.
D. The marginal effect is an increase in output of approximately 120 units of output.
D. The marginal effect is an increase in output of approximately 120 units of output.
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