The Following Linear Trend Equation Was Developed for Annual Sales

question 21

Multiple Choice

The following linear trend equation was developed for annual sales from 1995 to 2001 with 1995 the base or zero year. ŷ = 500 + 60t ($000) . What are the estimated sales for 2005 ($000) ?

• A) $500
• B) $560
• C) $600
• D) $1,040
• E) $1,100

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Definitions:

Midpoint Method

A technique used in economics to calculate the elasticity of demand or supply by using the midpoint between two points on a curve instead of relying on the initial or final point alone.

Price Elasticity

An indicator of the degree to which the demand for a product reacts to shifts in its price, showing how susceptible demand is to price fluctuations.

Equation

A mathematical statement that asserts the equality of two expressions, usually written with an equals sign ("=").

Midpoint Method

A technique used in economics to calculate the elasticity of demand or supply by taking the average of the starting and ending prices and quantities.