If the Least Squares Equation for Sales Data Going from 2004

question 113

Multiple Choice

If the least squares equation for sales data going from 2004 to 2008 is Ŷ = 10 + 1.3t (in $millions) , what is the value of t and the forecast for 2010?

• A) t = 6, Ŷ = 17.8
• B) t = 0, Ŷ = 10.0
• C) t = 7, Ŷ = 19.1
• D) t = 10, Ŷ = 0.0

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Definitions:

Opportunity Cost

The value of the next best alternative that is foregone as a result of making a particular decision.

Accounting Profits

The total revenues of a business minus the explicit costs, essentially the net income on the financial statements.

Total Revenue

The total income received by a firm from its sales of goods or services, calculated as the quantity sold multiplied by the selling price.

Barriers to Entry

Factors that prevent or hinder new competitors from easily entering an industry or area of business.