A Certain Type of Rare Gem Serves as a Status

question 63

Multiple Choice

A certain type of rare gem serves as a status symbol for many of its owners.In theory,for low prices,the demand increases,and it decreases as the price of the gem increases.However,experts hypothesize that when the gem is valued at very high prices,the demand increases with price due to the status owners believe they gain in obtaining the gem.Data on price and quantity sold were collected for a sample of 35 rare gems of this type.Which of the following would be the most appropriate analysis to perform?

• A)Quadratic regression model.
• B)Exponential smoothing.
• C)Autoregressive modeling for trend fitting and forecasting.
• D)Least-squares forecasting with monthly or quarterly data.

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Definitions:

Acquisition Method

An accounting technique used to consolidate the financial statements of two companies when one company acquires control of another.

Net Present Value

A method used in capital budgeting to assess the profitability of an investment by calculating the difference between the present value of cash inflows and outflows.

Future Cash Flows

Projections of the money a business expects to receive and pay out over a future period, influencing decision-making and valuation.

Replacement Cost

The cost to replace an asset with another of similar nature and capacity at the current prices, without considering any physical deterioration or obsolescence.