Instruction 14-5
a Local Store Developed a Multiplicative Time-Series Model $\hat { Y }$

question 91

Multiple Choice

Instruction 14-5
A local store developed a multiplicative time-series model to forecast its revenues in future quarters,using quarterly data on its revenues during the 4-year period from 2005 to 2009.The following is the resulting regression equation:
log 10 $\hat { Y }$ = 6.102 + 0.012 X - 0.129 Q₁ - 0.054 Q₂ + 0.098 Q₃
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 2005.
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 14-5,the best interpretation of the coefficient of Q₃ (0.098) in the regression equation is

• A)the revenues in the third quarter of a year is approximately 25.31% higher than the average over all 4 quarters.
• B)the revenues in the third quarter of a year is approximately 25.31% higher than it would be during the fourth quarter.
• C)the revenues in the third quarter of a year is approximately 9.8% higher than the average over all 4 quarters.
• D)the revenues in the third quarter of a year is approximately 9.8% higher than it would be during the fourth quarter.

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Definitions:

Cognitive Structure of Belief

The mental framework that organizes and influences one's acceptance of ideas, information, and perceptions, shaping attitudes and convictions.

Tendency for Attitudes

A predisposition or inclination to respond in a particular way toward certain situations, objects, or people, reflecting underlying beliefs or feelings.

Cognitive Dissonance Theory

A psychological theory that suggests that we experience discomfort or dissonance when our beliefs, ideals, or actions are in conflict, leading to an internal drive to reduce the dissonance.

Belief Perseverance

The finding that once beliefs form, they are resistant to change, even if the information on which they are based is discredited