A consulting firm estimates the following quarterly sales forecasting model: {Q_t}=a+bt+cD
Question: A consulting firm estimates the following quarterly sales forecasting model:
\[{{Q}_{t}}=a+bt+cD\]The consulting firm estimates the equation using quarterly data from 2000, quarter 1, to 2010, quarter 3, for a total of 43 observations (t=1 ... 43). The variable D is a dummy variable for the second quarter, where D=1 for the second quarter and D=0 otherwise. The results of the estimation are as follows.
a. At the 5 percent level of significance, is there a statistically significant trend in sales? Why?
b. Given the results in the table, is the trend in sales increasing or decreasing? Why?
c. At the 5 percent level of significance, are sales in the second quarter statistically different than sales in the other quarters? If yes, are sales higher or lower than other quarters?
d. What is the predicted level of sales in 2011, quarter 1?
e. What is the predicted level of sales in 2011, quarter 2?
f. What is the predicted level of sales in 2011, quarter 3?
g. What is the predicted level of sales in 2011, quarter 4?
Deliverable: Word Document
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