TABLE 16-12
the Manager of a Health Club Has Recorded

question 89

True/False

TABLE 16-12
The manager of a health club has recorded average attendance in newly introduced step classes over the last 15 months: 32.1, 39.5, 40.3, 46.0, 65.2, 73.1, 83.7, 106.8, 118.0, 133.1, 163.3, 182.8, 205.6, 249.1, and 263.5. She then used Microsoft Excel to
obtain the following partial output for both a first- and second-order autoregressive model.
SUMMARY OUTPUT - 2nd Order Model

$\begin{array} { l r }\text { Regression Statistics}\\ \text { Multiple R } & 0.993 \\ \text { R Square } & 0.987 \\ \text { Adjusted R Square } & 0.985 \\ \text { Standard Error } & 9.276 \\ \text { Observations } & 15 \end{array}$

$\begin{array}{ll} & \text { Coefficients } \\\text { Intercept } & 5.86 \\\text { X Variable 1 } & 0.37 \\\text { XVariable 2 } & 0.85\end{array}$
SUMMARY
OUTPUT - 1st Order
Model
Regression Statistics
$\begin{array} { l r } \text { Multiple R } & 0.993 \\ \text { R Square } & 0.987 \\ \text { Adjusted R Square } & 0.985 \\ \text { Standard Error } & 9.150 \\ \text { Observations } & 15 \end{array}$

$\begin{array}{ll} & \text { Coefficients } \\\text { Intercept } & 5.66\end{array}$
$\underline{\text {X Variable 1 \quad 1.10}}$
-Referring to Table 16-12, based on the parsimony principle, the second-order model is the better model for making forecasts.

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Definitions:

Health Care Industry

A sector that provides medical services, manufactures medical equipment, and develops pharmaceuticals, aiming to improve individual health outcomes.

Payroll Taxes

Taxes imposed on employers and employees, calculated as a percentage of the salaries that employers pay their staff, used to fund social security and medicare in many countries.

Health Insurance

A type of insurance coverage that typically pays for medical, surgical, prescription drug, and sometimes dental expenses incurred by the insured.

Moral Hazard Problem

A situation in economics where one party is more likely to take risks because the negative consequences of the risk will be felt by another party, often seen in insurance and finance sectors.