TABLE 16-12 A Local Store Developed a Multiplicative Time-Series Model to Forecast

question 76

Short Answer

TABLE 16-12
A local store developed a multiplicative time-series model to forecast its revenues in future quarters, using quarterly data on its revenues during the 4-year period from 2005 to 2009. The following is the resulting regression equation:
log₁₀ = 6.102 + 0.012 X - 0.129 Q₁ - 0.054 Q₂ + 0.098 Q₃
where is the estimated number of contracts in a quarter.
X is the coded quarterly value with X = 0 in the first quarter of 2005.
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 16-12, using the regression equation, what is the forecast for the revenues in the first quarter of 2012?

Discuss the implications of a firm's inability to cover variable costs and the decision to shut down.

Identify the role of competition in markets with price-taker firms.

Explain the conditions under which resources are efficiently allocated in competitive markets.

Understand the impact of new firm entry and exit on market equilibrium and economic profits in a competitive price-taker market.

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Definitions:

Synapse Formation

The process by which neurons form synapses with each other, enabling communication through neurotransmitter release and receptor binding.

Specialization

The process by which cells, organisms, or individuals become adapted to perform a specific function or to thrive in a particular environment.

Radial Glial Cells

Specialized cells in the brain and spinal cord that serve as scaffolds for migrating neurons during development.

Oligodendrocytes

Specialized glial cells in the central nervous system that myelinate axons, providing insulation and increasing the speed of electrical impulses.