TABLE 16-5 a Contractor Developed a Multiplicative Time-Series Model to Forecast the Forecast

question 188

Multiple Choice

TABLE 16-5
A contractor developed a multiplicative time-series model to forecast the number of contracts in future quarters, using quarterly data on number of contracts during the 3-year period from 1996 to 1998. The following is the resulting regression equation:
ln Y^{^} = 3.37 + 0.117 X - 0.083 Q₁ + 1.28 Q₂ + 0.617 Q₃
where
Y^{^} is the estimated number of contracts in a quarter
X is the coded quarterly value with X = 0 in the first quarter of 1996.
Q₁ is a dummy variable equal to 1 in the first quarter of a year and 0 otherwise.
Q₂ is a dummy variable equal to 1 in the second quarter of a year and 0 otherwise.
Q₃ is a dummy variable equal to 1 in the third quarter of a year and 0 otherwise.
-Referring to Table 16-5, using the regression equation, which of the following values is the best forecast for the number of contracts in the third quarter of 1999?

• A) 49091
• B) 421697
• C) 1482518
• D) 133352

Understand the effects of market entry and exit on demand and market equilibrium.

Recognize the conditions for long-run equilibrium in monopolistically competitive markets.

Examine the role of product differentiation in monopolistically competitive markets.

Understand the implications of economic profit and loss in monopolistically competitive markets in both short and long run.

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Definitions:

Law of Demand

A principle in economics that states the quantity demanded of a good falls as the price rises, and vice versa, all else being equal.

Pepsi

A carbonated soft drink produced and manufactured by PepsiCo, and one of the world's most famous and recognizable cola beverages.

Quantity

The quantity of a material or abstract item that is typically not measured in spatial terms.

Substitutes

Goods or services that can be used in place of one another, where the consumption of one increases when the price of the other increases.