A Time Series Regression Equation Measuring the Number of Surfboards

question 59

Multiple Choice

A time series regression equation measuring the number of surfboards sold by a surfboard manufacturing company in Australia is given below:
Y = 35 + 4Q₁ + 0.5Q₃ + 8Q₄ + 3t
With t in quarters and the origin is December 2010 and Q₁ is the indicator variable for March, Q₃ is the indicator variable for September and Q₄ is the indicator variable for December.
Which of the following statements is correct?

• A) The coefficients of the indicator variables are all positive because the June Quarter has the lowest sales of surfboards.
• B) The coefficients of the indicator variables are all positive because sales of surfboards in the March, September and December quarter are all above June.
• C) The coefficients of the indicator variables are all positive indicating that the June quarter is seasonally disadvantaged for selling surfboards due to winter in Australia in this quarter.
• D) All of these choices are correct.

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