Instruction 14-4
a Contractor Developed a Multiplicative Time-Series Model to Forecast

question 89

Multiple Choice

Instruction 14-4
A contractor developed a multiplicative time-series model to forecast the number of contracts in future quarters,using quarterly data on number of contracts during the 3-year period from 2008 to 2010.The following is the resulting regression equation:
$\log _ { 10 } \hat { Y } = 3.37 + 0.117 X - 0.083 Q _ { 1 } + 1.28 Q _ { 2 } + 0.617 Q _ { 3 }$
Where
$$\hat { Y }$$ is the estimated number of contracts in a quarter
X is the coded quarterly value with X = 0 in the first quarter of 2008.
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 Instruction 14-4,in testing the coefficient of X in the regression equation (0.117) the results were a t-statistic of 9.08 and an associated p-value of 0.0000.Which of the following is the best interpretation of this result?

• A)The quarterly growth rate in the number of contracts is not significantly different than 100% (? = 0.05).
• B)The quarterly growth rate in the number of contracts is significantly different than 100% (? = 0.05).
• C)The quarterly growth rate in the number of contracts is significantly different than 0% (? = 0.05).
• D)The quarterly growth rate in the number of contracts is not significantly different than 0% (? = 0.05).

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Definitions:

Economic Loss

A loss in financial terms representing the difference between the market value and the cost of production.

Perfect Competitor

A market participant that cannot influence the market price and must take it as given because the market is perfectly competitive.

Short Run

A period in economic theory during which at least one input, such as plant size or the number of firms in the industry, is fixed and cannot be changed.

Perfect Competitor

A theoretical market structure in which many firms sell an identical product, and no single buyer or seller can influence the market price.