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Questions and Answers
What is the purpose of the dummy variable D in the sales forecasting model?
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?
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?
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?
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?
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?
