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Questions and Answers
What is the purpose of the dummy variable D in the sales forecasting model?
What is the time period for which the quarterly data is used to estimate the sales forecasting model?
At the 1 percent level of significance, what can be concluded about the trend in sales?
What is the value of the dummy variable D in the first quarter?
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How many observations are used to estimate the sales forecasting model?
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Study Notes
Sales Forecasting Model
- The consulting firm uses a quarterly sales forecasting model in the form of Qt = a + bt + cD, where Qt is the quarterly sales and t is the time period.
Model Estimation
- The model is estimated using quarterly data from 2005 I to 2015 III, which covers 43 time periods (t = 1, ..., 43).
Dummy Variable
- The variable D is a dummy variable that represents the second quarter, with a value of 1 in the second quarter and 0 otherwise.
Estimation Results
- (Note: The estimation results are not provided, but the question asks about the significance of the trend in sales at the 1% level.)
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Description
A consulting firm estimates a quarterly sales forecasting model with a dummy variable for the second quarter. Is there a statistically significant trend in sales?
