When the Underlying Mean of a Time Series Is Very

question 9

Multiple Choice

When the underlying mean of a time series is very stable and there are no trend, cyclical, or seasonal influences:

• A) a simple moving-average forecast with n = 20 should outperform a simple moving-average forecast with n = 3.
• B) a simple moving-average forecast with n = 3 should outperform a simple moving-average forecast with n = 15.
• C) a simple moving-average forecast with n = 20 should perform about the same as a simple moving-average forecast with n = 3.
• D) an exponential smoothing forecast with a = 0.30 should outperform a simple moving-average forecast with α = 0.01.

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Definitions:

Competitive Firm

A company operating in a market where it has little to no market power, and thus sets its prices based on the market conditions.

Variable Factors

In economics, these are inputs or resources whose quantity can be changed in the short term to adjust the level of output.

Warehouse Space

The area available in a warehouse for the storage of goods, products, or materials.

Marginal Cost Curves

Graphical representations that show how the cost of producing one additional unit of a good varies as the quantity of output produced changes.