The Chief Meteorologist Quit in a Huff One Afternoon and the Station

question 76

Essay

The chief meteorologist quit in a huff one afternoon and the station manager turned to a demented walrus to prepare the forecast for the following nine days during sweeps week. The walrus was a ratings hit, but his forecasts, displayed in the table below, were not entirely accurate. Calculate MAD, MAPE and a tracking signal for the forecasts.
$$\begin{array} { | c | c | c | } \hline \text { Period } & \text { Actual } & \text { Forecast } \\\hline 1 & 26 & 12 \\\hline 2 & 7 & 23 \\\hline 3 & 12 & 4 \\\hline 4 & 20 & 19 \\\hline 5 & 27 & 22 \\\hline 6 & 14 & 8 \\\hline 7 & 10 & 28 \\\hline 8 & 27 & 10 \\\hline 9 & 27 & 26 \\\hline\end{array}$$

Recognize the reasons behind the shape of average cost curves.

Differentiate between diminishing returns to scale and decreasing returns to scale.

Understand factors leading to diminishing marginal returns.

Assess how returns to scale affect long-run average costs.

---

Definitions:

Urbanization

The process by which cities grow or areas become more urban in character, often indicative of social, economic, and environmental change.

Demographic Transition Theory

A theory that describes the transition from high birth and death rates to low birth and death rates as a country develops from a pre-industrial to an industrialized economic system.

Modernization Theory

A perspective that views the process of societal change towards adopting the characteristics of industrialized societies as inevitable and positive, associating it with economic growth and development.

Industrialization

The process by which an economy is transformed from primarily agricultural to one based on the manufacturing of goods. Individual manual labor is often replaced by mechanized mass production.