Managerial Economics Week 6 Individual Work 2 - Assignment Example

This is because as the output increase at one point, it does not necessarily increase at another point and the inverse is true. The increase in the operating expenditures per student does not bring out a large decrease to enrollment but rather there is an explicit nature of the function. Apart from enrollment, the other important variable in explaining the variations in operating expenditures per student is the teacher salary variable. This teacher salary variable is significant in the sense that it promotes a higher level of motivation thus the operating expenditure per student will decrease.

A decrease in teacher salary brings about an increase in the operating expenditure per student. When there is a higher rise in teacher salary, the operating expenditure per student will also rise significantly. Minimization is always ideal achieving the best of benefits in every institution. In this case, expenditures reduce and at the same time, there is a reduction in the enrollment level. Barriers towards enrollment also do not exist and it is a case of unconstrained optimization. To minimize on the operating expenditure per student the calculation takes the derivative of the operating expenditure with respect to enrollment. 30.9 is the reduction level towards the operating expenditure per student that will occur upon adding one more student.

This is because at this point (500) there are economies of scale and there are positive externalities. The regression value does not show a good fit value since it is less than 0.75. This is because the right hand side variables also do not fully explain most of the variations or changes. There is an inverse relationship between enrollment level and expenditure whereby the enrollment level increases as the operating expenditure declines. Economies of enrollment that can also show the size can decrease whenever the expenditures reduce as the enrollment