10. 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, se(b2)=3.2, se(53) = 0.11, se(b4)=0.002.
X2 = the cost per unit of the primary material input
X3 = the number of labour hours.
Given the estimated regression results, what can the manager infer about the relationship between the square of labour hours and the amount of output?
A. As the level of labour increases, at first expected output decreases to a minimum, then starts to increase.
B. As the level of labour increases, at first expected output increases reaching a maximum, then starts to decrease.
C. As the level of labour hours increases, average output decreases at an increasing rate.
D. As the level of labour increases, expected output increase at an increasing rate.
B. As the level of labour increases, at first expected output increases reaching a maximum, then starts to decrease.
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