SCENARIO 16-14 a Contractor Developed a Multiplicative Time-Series Model to Forecast the Forecast

question 3

Multiple Choice

SCENARIO 16-14
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 2011 to 2013.The following is the resulting regression equation:
ln Y^ˆ = 3.37 + 0.117 X - 0.083 Q₁ + 1.28 Q₂ + 0.617 Q₃
where
Y^ˆ is the estimated number of contracts in a quarter.
X is the coded quarterly value with X = 0 in the first quarter of 2011.
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 Scenario 16-14,using the regression equation,which of the following values is the best forecast for the number of contracts in the third quarter of 2014?

• A)49,091
• B)133,352
• C)421,697
• D)1,482,518

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Definitions:

Null Hypothesis

A statistical hypothesis that assumes no significant difference or effect exists.

Interval Estimate

An estimate of a population parameter that specifies a range of possible values.

Constituency

A body of voters in a specified area who elect a representative to a legislative body.

Significance Level

The probability of rejecting the null hypothesis when it is actually true, often denoted by alpha (α) and used as a threshold in hypothesis testing.