Your Task Is to Estimate the Ice Cream Sales for a Certain

question 47

Essay

Your task is to estimate the ice cream sales for a certain chain in New England. The company makes available to you quarterly ice cream sales (Y)and informs you that the price per gallon has approximately remained constant over the sample period. You gather information on average daily temperatures (X)during these quarters and regress Y on X, adding seasonal binary variables for spring, summer, and fall. These variables are constructed as follows: DSpring takes on a value of 1 during the spring and is zero otherwise, DSummer takes on a value of 1 during the summer, etc. Specify three regression functions where the following conditions hold: the relationship between Y and X is (i)forced to be the same for each quarter; (ii)allowed to have different intercepts each season; (iii)allowed to have varying slopes and intercepts each season. Sketch the difference between (i)and (ii). How would you test which model fits the data the best?

---

Definitions:

Supplies Ledger

A subsidiary ledger that tracks the purchase and usage of supplies, offering detailed information separate from the general ledger.

Medication Administration

The process of giving pharmaceutical substances to a patient to diagnose, treat, or prevent illness.

Administration Route

The path by which a drug or substance is taken into the body, such as oral, intravenous, or topical.

Allergy Shot

An injection containing a small amount of an allergen given to reduce the symptoms of allergies by gradually increasing tolerance to the allergen.