Deck 7: Demand Estimation and Forecasting

Question 1

For estimated demand for cement is

A) elastic because $\hat { E }$ = -4.0.
B) elastic because $\hat { E }$ = -2.0.
C) elastic because $\hat { E }$ = -1.5.
D) inelastic because $\hat { E }$ = -0.32.
E) inelastic because $\hat { E }$ = -0.8.

Answer 1

inelastic because $\hat { E }$ = -0.8.

Question 2

Refer to the following:
The estimated demand for a good is

$\hat { Q } = 4,800 - 16 P - 0.65 M - 1.5 P _ { R }$
where Q is the quantity demanded of the good, P is the price of the good, M is income, and
$P _ { R }$ is the price of related good R.

-The good is

A) an inferior good since the coefficient on $P _ { R }$ is negative.
B) a normal good since the coefficient on $P _ { R }$ is negative.
C) a normal good since the coefficient on M is greater than one (in absolute value).
D) an inferior good since the coefficient on M is negative.
E) none of the above

Answer 2

an inferior good since the coefficient on M is negative.

Question 3

If tax revenue per capita (M) increases 5%, the estimated quantity of cement demanded will

A) increase by less than 1%.
B) increase more than 1% but less than 5%.
C) increase more than 5% but less than 10%.
D) increase more than 10%.

Answer 3

increase more than 1% but less than 5%.

Question 4

Refer to the following:
The estimated demand for a good is

$$\hat { Q } = 25 - 5 P + 0.32 M + 12 P _ { R }$$
where Q is the quantity demanded of the good, P is the price of the good, M is income, and
$P _ { R }$ is the price of related good R.

-The coefficient on P

A) does not have the expected sign.
B) is negative as expected.
C) should have the same sign as the coefficient on $P _ { R }$ .
D) should not be greater than one (in absolute value).
E) both b and d

Question 5

Demand equations derived from actual market data are

A) empirical demand functions.
B) never estimated using consumer interviews.
C) generally estimated using regression analysis.
D) both a and c
E) all of the above

Question 6

Possible problems with consumer interviews include:

A) a non-random sample
B) the identification problem
C) response bias
D) both a and b
E) both a and c

Question 7

At the 1 percent level of significance, the number of degrees of freedom for a t-test is _____, and the critical value of the t-statistic is ________. Only parameter estimate(s) ________ is (are) NOT statistically significant at the 1 percent level of significance.

A) 30; 2.457; $\hat { a }$
B) 30; 2.750; $\hat { a }$
C) 34; 2.042; $\hat { c }$
D) 34; 2.042, $\hat { a }$ and
$\hat { c }$

Question 8

The estimated cross-price elasticity of demand for cement relative to the price of asphalt is

A) 0.3
B) 0.6
C) 1.2
D) 3.0
E) none of the above

Question 9

Refer to the following:
The estimated demand for a good is

$$\hat { Q } = 25 - 5 P + 0.32 M + 12 P _ { R }$$
where Q is the quantity demanded of the good, P is the price of the good, M is income, and
$P _ { R }$ is the price of related good R.

-The good and the related good R are

A) complements since the coefficient on M is positive.
B) substitutes since the coefficient on M is positive.
C) complements since the coefficient on $P _ { R }$ is positive.
D) substitutes since the coefficient on $P _ { R }$ is positive.

Question 10

One problem with consumer interviews is that

A) the sample may not be a representative sample.
B) response bias.
C) interviews are not very scientific.
D) both a and b
E) all of the above

Question 11

Refer to the following:
The estimated demand for a good is

$\hat { Q } = 4,800 - 16 P - 0.65 M - 1.5 P _ { R }$
where Q is the quantity demanded of the good, P is the price of the good, M is income, and
$P _ { R }$ is the price of related good R.

-If income decreases by $2,000, all else constant, quantity demanded will ________ by _________ units.

A) increase; 1.30 units
B) decrease; 6.5 units
C) increase; 1,300 units
D) decrease; 65 units

Question 12

Refer to the following:
The estimated demand for a good is

$\hat { Q } = 4,800 - 16 P - 0.65 M - 1.5 P _ { R }$
where Q is the quantity demanded of the good, P is the price of the good, M is income, and
$P _ { R }$ is the price of related good R.

-The coefficient on P

A) violates the law of demand.
B) is negative as dictated by the law of demand.
C) should not be greater than one (in absolute value).
D) should have the same sign as the coefficient on $P _ { R }$ .
E) both c and d

Question 13

If the price of asphalt ( $P _ { R }$ ) decreases 20%, the estimated quantity of cement demanded will:

A) increase 12%
B) increase 6%
C) increase 1.2%
D) decrease 12%.
E) decrease 1.2%.

Question 14

Refer to the following:
The estimated demand for a good is

$$\hat { Q } = 25 - 5 P + 0.32 M + 12 P _ { R }$$
where Q is the quantity demanded of the good, P is the price of the good, M is income, and
$P _ { R }$ is the price of related good R.

-If the price of the good falls by $4, the quantity demanded will ________ by ________ units.

A) increase; 5 units
B) increase; 20 units
C) increase; 50 units
D) increase; 48 units
E) decrease; 12 units

Question 15

Refer to the following:
The estimated demand for a good is

$\hat { Q } = 4,800 - 16 P - 0.65 M - 1.5 P _ { R }$
where Q is the quantity demanded of the good, P is the price of the good, M is income, and
$P _ { R }$ is the price of related good R.

-If the price of the good rises by $10, all else constant, the quantity demanded will ________ by ________ units.

A) increase; 16 units
B) decrease; 160 units
C) decrease; 1.5 units
D) increase; 150 units

Question 16

Refer to the following:
The estimated demand for a good is

$$\hat { Q } = 25 - 5 P + 0.32 M + 12 P _ { R }$$
where Q is the quantity demanded of the good, P is the price of the good, M is income, and
$P _ { R }$ is the price of related good R.

-The good is

A) an inferior good since the coefficient on $P _ { R }$ is positive.
B) a normal good since the coefficient on $P _ { R }$ is positive.
C) an inferior good since the coefficient on M is greater than one.
D) a normal good since the coefficient on M is positive.
E) none of the above

Question 17

Refer to the following:
The estimated demand for a good is

$\hat { Q } = 4,800 - 16 P - 0.65 M - 1.5 P _ { R }$
where Q is the quantity demanded of the good, P is the price of the good, M is income, and
$P _ { R }$ is the price of related good R.

-The good and good R are

A) complements since the coefficient on M is negative.
B) substitutes since the coefficient on M is negative.
C) complements since the coefficient on $P _ { R }$ is negative.
D) substitutes since the coefficient on $P _ { R }$ is negative.
E) none of the above

Question 18

If demand is estimated using the empirical specification $\ln Q = \ln a + b \ln P + c \ln M + d \ln P _ { R }$ , then an equivalent expression for demand is

A) $\ln Q = a + b P + c M + d P _ { R }$ .
B) $Q = a + b P + c M + d P _ { R }$ .
C) $Q = e ^ { a } + b P + c M + d P _ { R }$ .
D) $Q = a b P c M d P _ { R }$ .
E) none of the above

Question 19

Refer to the following:
The estimated demand for a good is

$$\hat { Q } = 25 - 5 P + 0.32 M + 12 P _ { R }$$
where Q is the quantity demanded of the good, P is the price of the good, M is income, and
$P _ { R }$ is the price of related good R.

-If income decreases by $1,000, all else constant, quantity demanded will ________ by _________ units.

A) decrease; 320 units.
B) increase; 3.2 units
C) decrease; 1200 units
D) increase; 500 units
E) increase; 500 units.

Question 20

A representative sample

A) eliminates the problem of response bias.
B) reflects the characteristics of the population.
C) is frequently a random sample.
D) both b and c
E) all of the above

Question 21

Refer to the following:
The following linear demand specification is estimated for Conlan Enterprises, a price-setting firm:
$Q = a + b P + c M + d P _ { R }$
where Q is the quantity demanded of the product Conlan Enterprises sells, P is the price of that product, M is income, and
$P _ { R }$ is the price of a related product. The results of the estimation are presented below:
$\begin{array}{rllll}\text { DEPENDENT VARIABLE: } & Q & \text { R-SQUARE } & \text { F-RATIO } & \text { P-VALUEONF } \\\text { OBSERVATIONS: } 32 & 0.7984 & 36.14 & 0.0001\\\\\text { VARIABLE } & \text { PARAMETER } & \text { STANDARD } & & \\& \text { ESTIMATE } & \text { ERROR } & \text { T-RATIO } & \text { P-VALUE } \\\text { INTERCEPT } & 846.30 & 76.70 & 11.03 & 0.0001 \\\text { P } & -8.60 & 2.60 & -3.31 & 0.0026 \\\text { M } & 0.0184 & 0.0048 & 3.83 & 0.0007 \\\text { PR }& -4.3075 & 1.230 & -3.50 & 0.0016\end{array}$

-At the 1% level of significance, the critical value of the -statistic is equal to __________.

A) 0.7984
B) 4.57
C) 36.14
D) 2.763
E) -3.50

Question 22

Dummy variables are used in time-series forecasting models

A) to change the intercept of a regression in selected periods.
B) to account for random variation in the data.
C) to account for seasonal variation in the data.
D) both a and b
E) both a and c

Question 23

If Build-Right decides to charge the State Highway Department $55 per yard for its cement when tax revenues per capita are $3,200 and the price of asphalt is $35 per yard, the expected quantity demanded is

A) 1,000 yards of cement.
B) 2,000 yards of cement.
C) 4,000 yards of cement.
D) 6,000 yards of cement.
E) 8,000 yards of cement.

Question 24

Refer to the following:
The following linear demand specification is estimated for Conlan Enterprises, a price-setting firm:
$Q = a + b P + c M + d P _ { R }$
where Q is the quantity demanded of the product Conlan Enterprises sells, P is the price of that product, M is income, and
$P _ { R }$ is the price of a related product. The results of the estimation are presented below:
$\begin{array}{rllll}\text { DEPENDENT VARIABLE: } & Q & \text { R-SQUARE } & \text { F-RATIO } & \text { P-VALUEONF } \\\text { OBSERVATIONS: } 32 & 0.7984 & 36.14 & 0.0001\\\\\text { VARIABLE } & \text { PARAMETER } & \text { STANDARD } & & \\& \text { ESTIMATE } & \text { ERROR } & \text { T-RATIO } & \text { P-VALUE } \\\text { INTERCEPT } & 846.30 & 76.70 & 11.03 & 0.0001 \\\text { P } & -8.60 & 2.60 & -3.31 & 0.0026 \\\text { M } & 0.0184 & 0.0048 & 3.83 & 0.0007 \\\text { PR }& -4.3075 & 1.230 & -3.50 & 0.0016\end{array}$

-At the 1% level of significance, the critical value of the t-statistic used by Conlan to test for statistical significance has _____ degrees of freedom and is equal to ________.

A) 32; 0.7984
B) 32; 36.14
C) 32; 4.57
D) 30; 2.750
E) 28; 2.763

Question 25

Refer to the following:
A consulting firm estimates the following quarterly sales forecasting model:
$Q _ { t } = a + b t + c D$
The equation is estimated using quarterly data from 2003I-2013III (t = 1,..., 43). The variable D is a dummy variable for the second quarter where:
D = 1 in the second quarter, and 0 otherwise.
The results of the estimation are:
$\begin{array}{rllll}\text { DEPENDENT VARIABLE: } & \text { QT } & \text { R-SQUARE } & \text { F-RATIO } & \text { P-VALUE ONF } \\\text { OBSERVATIONS: } & 43 & 0.8644 & 127.5 & 0.0001\\\\\text { VARIABLE } & \text { PARAMETER } & \text { STANDARD } & \\&\text { ESTIMATE } & \text { ERROR } & \text { T-RATIO } & \text { P-VALUE } \\\text { INTERCEPT } & 22.5 & 9.32 & 2.41 & 0.0201 \\\text { T } & 1.86 & 0.55 & 3.38 & 0.0016 \\\text { D } & 2.0 & 0.71 & 2.82 & 0.0075\end{array}$

-At the 1 percent level of significance, is there a statistically significant trend in sales?

A) No, since 1.86 < 2.704
B) No, since 0.55 < 1.86
C) No, since 1.02 < 2.704
D) Yes, since 1.86 > 0.55
E) Yes, since 3.38 > 2.704

Question 26

Refer to the following:
The following linear demand specification is estimated for Conlan Enterprises, a price-setting firm:

$Q = a + b P + c M + d P _ { R }$
where Q is the quantity demanded of the product Conlan Enterprises sells, P is the price of that product, M is income, and
$P _ { R }$ is the price of a related product. The results of the estimation are presented below:
$\begin{array}{rllll}\text { DEPENDENT VARIABLE: } & Q & \text { R-SQUARE } & \text { F-RATIO } & \text { P-VALUEONF } \\\text { OBSERVATIONS: } 32 & 0.7984 & 36.14 & 0.0001\\\\\text { VARIABLE } & \text { PARAMETER } & \text { STANDARD } & & \\& \text { ESTIMATE } & \text { ERROR } & \text { T-RATIO } & \text { P-VALUE } \\\text { INTERCEPT } & 846.30 & 76.70 & 11.03 & 0.0001 \\\text { P } & -8.60 & 2.60 & -3.31 & 0.0026 \\\text { M } & 0.0184 & 0.0048 & 3.83 & 0.0007 \\\text { PR }& -4.3075 & 1.230 & -3.50 & 0.0016\end{array}$
For the next 2 questions suppose income remains at $10,000 but the price of the related good increases to $60 and Conlan decides to raise the price of its product to $50.

-What is the new own price elasticity of demand?

A) -0.24
B) -0.43
C) -0.87
D) -1.00
E) -1.26

Question 27

Seasonal or cyclical variation in a time series model

A) is regular in nature and can be accounted for by dummy variables.
B) can decrease the accuracy of a forecast if not accounted for by dummy variables.
C) exhibits irregular variation that can be accounted for by dummy variables.
D) both a and b
E) both b and c

Question 28

Refer to the following:
The following linear demand specification is estimated for Conlan Enterprises, a price-setting firm:
$Q = a + b P + c M + d P _ { R }$
where Q is the quantity demanded of the product Conlan Enterprises sells, P is the price of that product, M is income, and
$P _ { R }$ is the price of a related product. The results of the estimation are presented below:
$\begin{array}{rllll}\text { DEPENDENT VARIABLE: } & Q & \text { R-SQUARE } & \text { F-RATIO } & \text { P-VALUEONF } \\\text { OBSERVATIONS: } 32 & 0.7984 & 36.14 & 0.0001\\\\\text { VARIABLE } & \text { PARAMETER } & \text { STANDARD } & & \\& \text { ESTIMATE } & \text { ERROR } & \text { T-RATIO } & \text { P-VALUE } \\\text { INTERCEPT } & 846.30 & 76.70 & 11.03 & 0.0001 \\\text { P } & -8.60 & 2.60 & -3.31 & 0.0026 \\\text { M } & 0.0184 & 0.0048 & 3.83 & 0.0007 \\\text { PR }& -4.3075 & 1.230 & -3.50 & 0.0016\end{array}$
Assume that the income is $10,000, the price of the related good is $40, and Conlan chooses to set the price of this product at $30.

-At the prices and income given above, Conlan can expect to sell _________units.

A) 342
B) 600
C) 724
D) 864
E) 872

Question 29

Refer to the following:
The following linear demand specification is estimated for Conlan Enterprises, a price-setting firm:
$Q = a + b P + c M + d P _ { R }$
where Q is the quantity demanded of the product Conlan Enterprises sells, P is the price of that product, M is income, and
$P _ { R }$ is the price of a related product. The results of the estimation are presented below:
$\begin{array}{rllll}\text { DEPENDENT VARIABLE: } & Q & \text { R-SQUARE } & \text { F-RATIO } & \text { P-VALUEONF } \\\text { OBSERVATIONS: } 32 & 0.7984 & 36.14 & 0.0001\\\\\text { VARIABLE } & \text { PARAMETER } & \text { STANDARD } & & \\& \text { ESTIMATE } & \text { ERROR } & \text { T-RATIO } & \text { P-VALUE } \\\text { INTERCEPT } & 846.30 & 76.70 & 11.03 & 0.0001 \\\text { P } & -8.60 & 2.60 & -3.31 & 0.0026 \\\text { M } & 0.0184 & 0.0048 & 3.83 & 0.0007 \\\text { PR }& -4.3075 & 1.230 & -3.50 & 0.0016\end{array}$

-At the 1% level of significance, which estimates are statistically significant?

A) All are statistically significant
B) All but $\hat { a }$ are statistically significant
C) Only $\hat { a } , \hat { b } \text {, and } \hat { c }$ are statistically significant
D) Only $\hat { a }$ is statistically significant
E) All but $\hat { b } \text { and } \hat { d }$ are statistically significant

Question 30

Refer to the following:
The following linear demand specification is estimated for Conlan Enterprises, a price-setting firm:

$Q = a + b P + c M + d P _ { R }$
where Q is the quantity demanded of the product Conlan Enterprises sells, P is the price of that product, M is income, and
$P _ { R }$ is the price of a related product. The results of the estimation are presented below:
$\begin{array}{rllll}\text { DEPENDENT VARIABLE: } & Q & \text { R-SQUARE } & \text { F-RATIO } & \text { P-VALUEONF } \\\text { OBSERVATIONS: } 32 & 0.7984 & 36.14 & 0.0001\\\\\text { VARIABLE } & \text { PARAMETER } & \text { STANDARD } & & \\& \text { ESTIMATE } & \text { ERROR } & \text { T-RATIO } & \text { P-VALUE } \\\text { INTERCEPT } & 846.30 & 76.70 & 11.03 & 0.0001 \\\text { P } & -8.60 & 2.60 & -3.31 & 0.0026 \\\text { M } & 0.0184 & 0.0048 & 3.83 & 0.0007 \\\text { PR }& -4.3075 & 1.230 & -3.50 & 0.0016\end{array}$
For the next 2 questions suppose income remains at $10,000 but the price of the related good increases to $60 and Conlan decides to raise the price of its product to $50.

-At the prices and income given above, Conlan can expect to sell _________units.

A) 342
B) 600
C) 724
D) 864
E) 872

Question 31

Refer to the following:
The following linear demand specification is estimated for Conlan Enterprises, a price-setting firm:
$Q = a + b P + c M + d P _ { R }$
where Q is the quantity demanded of the product Conlan Enterprises sells, P is the price of that product, M is income, and
$P _ { R }$ is the price of a related product. The results of the estimation are presented below:
$\begin{array}{rllll}\text { DEPENDENT VARIABLE: } & Q & \text { R-SQUARE } & \text { F-RATIO } & \text { P-VALUEONF } \\\text { OBSERVATIONS: } 32 & 0.7984 & 36.14 & 0.0001\\\\\text { VARIABLE } & \text { PARAMETER } & \text { STANDARD } & & \\& \text { ESTIMATE } & \text { ERROR } & \text { T-RATIO } & \text { P-VALUE } \\\text { INTERCEPT } & 846.30 & 76.70 & 11.03 & 0.0001 \\\text { P } & -8.60 & 2.60 & -3.31 & 0.0026 \\\text { M } & 0.0184 & 0.0048 & 3.83 & 0.0007 \\\text { PR }& -4.3075 & 1.230 & -3.50 & 0.0016\end{array}$
Assume that the income is $10,000, the price of the related good is $40, and Conlan chooses to set the price of this product at $30.

-At the prices and income given above, what is the price elasticity of demand?

A) -0.43
B) -0.86
C) -1.00
D) -1.43
E) -2.40

Question 32

Qualitative forecasting methods

A) use higher quality data than statistical methods.
B) are often the result of expert opinion.
C) cannot be replicated by another researcher.
D) both b and c
E) all of the above

Question 33

Refer to the following:
A consulting firm estimates the following quarterly sales forecasting model:
$Q _ { t } = a + b t + c D$
The equation is estimated using quarterly data from 2003I-2013III (t = 1,..., 43). The variable D is a dummy variable for the second quarter where:
D = 1 in the second quarter, and 0 otherwise.
The results of the estimation are:
$\begin{array}{rllll}\text { DEPENDENT VARIABLE: } & \text { QT } & \text { R-SQUARE } & \text { F-RATIO } & \text { P-VALUE ONF } \\\text { OBSERVATIONS: } & 43 & 0.8644 & 127.5 & 0.0001\\\\\text { VARIABLE } & \text { PARAMETER } & \text { STANDARD } & \\&\text { ESTIMATE } & \text { ERROR } & \text { T-RATIO } & \text { P-VALUE } \\\text { INTERCEPT } & 22.5 & 9.32 & 2.41 & 0.0201 \\\text { T } & 1.86 & 0.55 & 3.38 & 0.0016 \\\text { D } & 2.0 & 0.71 & 2.82 & 0.0075\end{array}$

-At the 1 percent level of significance, is there a statistically significant trend in sales?

A) Yes, because 0.0016 < 0.01.
B) No, because 0.0016 < 0.01.
C) Yes, because 0.55 > 0.01.
D) Yes, because 1.86 > 0.01.
E) both c and d

Question 34

A market-determined price

A) is determined by the manager of a firm.
B) is determined by the intersection of demand and supply curves.
C) is an endogenous variable
D) both a and b
E) both b and c

Question 35

Manager-determined prices are

A) not determined by the forces of demand and supply.
B) exogenous variables in a demand equations.
C) associated with price-taking firms.
D) both a and b
E) both b and c

Question 36

Time-series models

A) cannot be replicated by another researcher.
B) use dummy variables to control for cyclical variation.
C) use dummy variables to control for time trend.
D) both a and b
E) both b and c

Question 37

Time-series data

A) show the behavior of a particular variable over time.
B) may exhibit trend or cyclical variation, but not both at the same time.
C) may exhibit trend or cyclical variation at the same time.
D) both a and b
E) both a and c

Question 38

The estimated demand for a good is $\hat { Q } = 70 - 3.5 P - 0.6 M + 4 P _ { z }$ , where $\hat { Q }$ = units of the good, P = price of the good, M = income, and $P _ { z }$ = price of related good Z. All parameter estimates are statistically significant. Which of the following statements are correct?

A) X is a normal good.
B) X is an inferior good.
C) X and Z are substitutes.
D) X and Z are complements.
E) both b and c

Question 39

Refer to the following:
The following linear demand specification is estimated for Conlan Enterprises, a price-setting firm:
$Q = a + b P + c M + d P _ { R }$
where Q is the quantity demanded of the product Conlan Enterprises sells, P is the price of that product, M is income, and
$P _ { R }$ is the price of a related product. The results of the estimation are presented below:
$\begin{array}{rllll}\text { DEPENDENT VARIABLE: } & Q & \text { R-SQUARE } & \text { F-RATIO } & \text { P-VALUEONF } \\\text { OBSERVATIONS: } 32 & 0.7984 & 36.14 & 0.0001\\\\\text { VARIABLE } & \text { PARAMETER } & \text { STANDARD } & & \\& \text { ESTIMATE } & \text { ERROR } & \text { T-RATIO } & \text { P-VALUE } \\\text { INTERCEPT } & 846.30 & 76.70 & 11.03 & 0.0001 \\\text { P } & -8.60 & 2.60 & -3.31 & 0.0026 \\\text { M } & 0.0184 & 0.0048 & 3.83 & 0.0007 \\\text { PR }& -4.3075 & 1.230 & -3.50 & 0.0016\end{array}$

-Based upon the parameter estimates in the above table

A) this good is a normal good.
B) the related good is a substitute.
C) the related good is a complement.
D) a and b
E) a and c

Question 40

Refer to the following:
The following linear demand specification is estimated for Conlan Enterprises, a price-setting firm:
$Q = a + b P + c M + d P _ { R }$
where Q is the quantity demanded of the product Conlan Enterprises sells, P is the price of that product, M is income, and
$P _ { R }$ is the price of a related product. The results of the estimation are presented below:
$\begin{array}{rllll}\text { DEPENDENT VARIABLE: } & Q & \text { R-SQUARE } & \text { F-RATIO } & \text { P-VALUEONF } \\\text { OBSERVATIONS: } 32 & 0.7984 & 36.14 & 0.0001\\\\\text { VARIABLE } & \text { PARAMETER } & \text { STANDARD } & & \\& \text { ESTIMATE } & \text { ERROR } & \text { T-RATIO } & \text { P-VALUE } \\\text { INTERCEPT } & 846.30 & 76.70 & 11.03 & 0.0001 \\\text { P } & -8.60 & 2.60 & -3.31 & 0.0026 \\\text { M } & 0.0184 & 0.0048 & 3.83 & 0.0007 \\\text { PR }& -4.3075 & 1.230 & -3.50 & 0.0016\end{array}$
Assume that the income is $10,000, the price of the related good is $40, and Conlan chooses to set the price of this product at $30.

-At the prices and income given above, what is the income elasticity?

A) -1.62
B)-0.87
C) 0.21
D) 0.31
E) 1.50

Question 41

Refer to the following:
A consulting firm estimates the following quarterly sales forecasting model:
$Q _ { t } = a + b t + c D$
The equation is estimated using quarterly data from 2003I-2013III (t = 1,..., 43). The variable D is a dummy variable for the second quarter where:
D = 1 in the second quarter, and 0 otherwise.
The results of the estimation are:
$\begin{array}{rllll}\text { DEPENDENT VARIABLE: } & \text { QT } & \text { R-SQUARE } & \text { F-RATIO } & \text { P-VALUE ONF } \\\text { OBSERVATIONS: } & 43 & 0.8644 & 127.5 & 0.0001\\\\\text { VARIABLE } & \text { PARAMETER } & \text { STANDARD } & \\&\text { ESTIMATE } & \text { ERROR } & \text { T-RATIO } & \text { P-VALUE } \\\text { INTERCEPT } & 22.5 & 9.32 & 2.41 & 0.0201 \\\text { T } & 1.86 & 0.55 & 3.38 & 0.0016 \\\text { D } & 2.0 & 0.71 & 2.82 & 0.0075\end{array}$

-These estimates indicate that the second quarter change in sales is

A) 22.5 units higher in the second quarter than in the other three quarters.
B) 1.86 units higher in the second quarter than in the other three quarters.
C) 2.00 units higher in the second quarter than in the other three quarters.
D) 24.5 units higher in the second quarter than in the other three quarters.

Question 42

Refer to the following:
A consulting firm estimates the following quarterly sales forecasting model:
$Q _ { t } = a + b t + c D$
The equation is estimated using quarterly data from 2003I-2013III (t = 1,..., 43). The variable D is a dummy variable for the second quarter where:
D = 1 in the second quarter, and 0 otherwise.
The results of the estimation are:
$\begin{array}{rllll}\text { DEPENDENT VARIABLE: } & \text { QT } & \text { R-SQUARE } & \text { F-RATIO } & \text { P-VALUE ONF } \\\text { OBSERVATIONS: } & 43 & 0.8644 & 127.5 & 0.0001\\\\\text { VARIABLE } & \text { PARAMETER } & \text { STANDARD } & \\&\text { ESTIMATE } & \text { ERROR } & \text { T-RATIO } & \text { P-VALUE } \\\text { INTERCEPT } & 22.5 & 9.32 & 2.41 & 0.0201 \\\text { T } & 1.86 & 0.55 & 3.38 & 0.0016 \\\text { D } & 2.0 & 0.71 & 2.82 & 0.0075\end{array}$

-What is the estimated intercept of the trend line in the second quarter?

A) 22.50
B) 24.50
C) 24.36
D) 2.00
E) none of the above

Question 43

Refer to the following:
A forecaster used the regression equation
$Q _ { t } = a + b t + c _ { 1 } D _ { 1 } + c _ { 2 } D _ { 2 } + c _ { 3 } D _ { 3 }$
and quarterly sales data for 1996I-2013IV (t = 1, ..., 64) for an appliance manufacturer to obtain the results shown below. Q is quarterly sales, and
$D _ { 1 } , D _ { 2 }$ and
$D _ { 3 }$ are dummy variables for quarters I, II, and III.
$$\begin{array} { | l l l l l l } \hline \text { DEPENDENTVARIAELE: } & \text { aT } & \text { R-SQUARE } & \text { F-RATIO } & \text { P-VALUE ON F } \\\text { OESERVATIONS: } & 64 & \text { 0.8768 } & 107.982 & 0.0001 & \\& & \text { PARAMETER } & \text { STANDARD } & & \\\text { VARIAELE } & & \text { ESTIMATE } & \text { ERROR } & \text { T-RATIO } & \text { P-VALUE } \\\text { INTERCEPT } & & 30.0 & 12.8 & 2.34 & 0.0224 \\\text { T } & & 1.5 & 0.70 & 2.14 & 0.0362 \\\text { D1 } & & 10.0 & 3.0 & 3.33 & 0.0015 \\\text { D2 } & & 25.0 & 7.2 & 3.47 & 0.0010 \\\text { D3 } & & 40.0 & 15.8 & 2.53 & 0.0140 \\\hline\end{array}$$

-Using the estimation results given above, the predicted level of sales in 2014IV is _______ units.

A) 125
B) 127.50
C) 132
D) 133.5
E) none of the above

Question 44

Refer to the following:
A forecaster used the regression equation
$Q _ { t } = a + b t + c _ { 1 } D _ { 1 } + c _ { 2 } D _ { 2 } + c _ { 3 } D _ { 3 }$
and quarterly sales data for 1996I-2013IV (t = 1, ..., 64) for an appliance manufacturer to obtain the results shown below. Q is quarterly sales, and
$D _ { 1 } , D _ { 2 }$ and
$D _ { 3 }$ are dummy variables for quarters I, II, and III.
$$\begin{array} { | l l l l l l } \hline \text { DEPENDENTVARIAELE: } & \text { aT } & \text { R-SQUARE } & \text { F-RATIO } & \text { P-VALUE ON F } \\\text { OESERVATIONS: } & 64 & \text { 0.8768 } & 107.982 & 0.0001 & \\& & \text { PARAMETER } & \text { STANDARD } & & \\\text { VARIAELE } & & \text { ESTIMATE } & \text { ERROR } & \text { T-RATIO } & \text { P-VALUE } \\\text { INTERCEPT } & & 30.0 & 12.8 & 2.34 & 0.0224 \\\text { T } & & 1.5 & 0.70 & 2.14 & 0.0362 \\\text { D1 } & & 10.0 & 3.0 & 3.33 & 0.0015 \\\text { D2 } & & 25.0 & 7.2 & 3.47 & 0.0010 \\\text { D3 } & & 40.0 & 15.8 & 2.53 & 0.0140 \\\hline\end{array}$$

-Using the estimation results given above, the predicted level of sales in 2014II is _______ units.

A) 127.5
B) 137.5
C) 154
D) 155.5
E) none of the above

Question 45

Refer to the following:
A forecaster used the regression equation
$Q _ { t } = a + b t + c _ { 1 } D _ { 1 } + c _ { 2 } D _ { 2 } + c _ { 3 } D _ { 3 }$
and quarterly sales data for 1996I-2013IV (t = 1, ..., 64) for an appliance manufacturer to obtain the results shown below. Q is quarterly sales, and
$D _ { 1 } , D _ { 2 }$ and
$D _ { 3 }$ are dummy variables for quarters I, II, and III.
$$\begin{array} { | l l l l l l } \hline \text { DEPENDENTVARIAELE: } & \text { aT } & \text { R-SQUARE } & \text { F-RATIO } & \text { P-VALUE ON F } \\\text { OESERVATIONS: } & 64 & \text { 0.8768 } & 107.982 & 0.0001 & \\& & \text { PARAMETER } & \text { STANDARD } & & \\\text { VARIAELE } & & \text { ESTIMATE } & \text { ERROR } & \text { T-RATIO } & \text { P-VALUE } \\\text { INTERCEPT } & & 30.0 & 12.8 & 2.34 & 0.0224 \\\text { T } & & 1.5 & 0.70 & 2.14 & 0.0362 \\\text { D1 } & & 10.0 & 3.0 & 3.33 & 0.0015 \\\text { D2 } & & 25.0 & 7.2 & 3.47 & 0.0010 \\\text { D3 } & & 40.0 & 15.8 & 2.53 & 0.0140 \\\hline\end{array}$$

-Using the estimation results given above, the predicted level of sales in 2014III is _______ units.

A) 141.5
B) 156
C) 172
D) 173.5
E) none of the above

Question 46

Refer to the following:
A consulting firm estimates the following quarterly sales forecasting model:
$Q _ { t } = a + b t + c D$
The equation is estimated using quarterly data from 2003I-2013III (t = 1,..., 43). The variable D is a dummy variable for the second quarter where:
D = 1 in the second quarter, and 0 otherwise.
The results of the estimation are:
$\begin{array}{rllll}\text { DEPENDENT VARIABLE: } & \text { QT } & \text { R-SQUARE } & \text { F-RATIO } & \text { P-VALUE ONF } \\\text { OBSERVATIONS: } & 43 & 0.8644 & 127.5 & 0.0001\\\\\text { VARIABLE } & \text { PARAMETER } & \text { STANDARD } & \\&\text { ESTIMATE } & \text { ERROR } & \text { T-RATIO } & \text { P-VALUE } \\\text { INTERCEPT } & 22.5 & 9.32 & 2.41 & 0.0201 \\\text { T } & 1.86 & 0.55 & 3.38 & 0.0016 \\\text { D } & 2.0 & 0.71 & 2.82 & 0.0075\end{array}$

-Using the estimated trend line, what is the predicted level of sales in 2013IV ?

A) 110.06
B) 106.20
C) 104.34
D) 102.2
E) none of the above

Question 47

Refer to the following:
The manufacturer of Beanie Baby dolls used quarterly price data for 2005I - 2013IV (t = 1, ..., 36) and the regression equation
$P _ { t } = a + b t + c _ { 1 } D 1 _ { t } + c _ { 2 } D 2 _ { t } + c _ { 3 } D 3 _ { t }$
to forecast doll prices in the year 2014.
$P _ { t }$ is the quarterly price of dolls, and
$D 1 _ { t } , D 2 _ { t }$ and
$D 3 _ { t }$ are dummy variables for quarters I, II, and III, respectively.
$\begin{array}{rllll}\text { DEPENDENT VARIABLE: } & \text { PT } & \text { R-SQUARE } & \text { F-RATIO } & \text { P-VALUE ON F } \\\text { OBSERVATIONS: } & 36 & 0.9078 & 76.34 & 0.0001\end{array}$

$\begin{array}{lllll}\text { VARIABLE } & \text { PARAMETER } & \text { STANDARD } & T-RATIO&P-VALUE \\\text { ESTERCEPT } & 24.0 & 6.20 & 3.87 & 0.0005 \\\text { T } & 0.800 & 0.240 & 3.33 & 0.0022 \\\text { D1 } & -8.0 & 2.60 & -3.08 & 0.0043 \\\text { D2 } & -6.00 & 1.80 & -3.33 & 0.0022 \\\text { D3 } & -4.0 & 0.60 & -6.67 & 0.0001\end{array}$

-The estimated QUARTERLY increase in price is ______, and the estimated ANNUAL increase in price is ______ .

A) $1.50; $6.00
B) $1.40; $4.00
C) $0.60; $2.40
D) $0.80; $3.20
E) none of the above

Question 48

Refer to the following:
A forecaster used the regression equation
$Q _ { t } = a + b t + c _ { 1 } D _ { 1 } + c _ { 2 } D _ { 2 } + c _ { 3 } D _ { 3 }$
and quarterly sales data for 1996I-2013IV (t = 1, ..., 64) for an appliance manufacturer to obtain the results shown below. Q is quarterly sales, and
$D _ { 1 } , D _ { 2 }$ and
$D _ { 3 }$ are dummy variables for quarters I, II, and III.
$$\begin{array} { | l l l l l l } \hline \text { DEPENDENTVARIAELE: } & \text { aT } & \text { R-SQUARE } & \text { F-RATIO } & \text { P-VALUE ON F } \\\text { OESERVATIONS: } & 64 & \text { 0.8768 } & 107.982 & 0.0001 & \\& & \text { PARAMETER } & \text { STANDARD } & & \\\text { VARIAELE } & & \text { ESTIMATE } & \text { ERROR } & \text { T-RATIO } & \text { P-VALUE } \\\text { INTERCEPT } & & 30.0 & 12.8 & 2.34 & 0.0224 \\\text { T } & & 1.5 & 0.70 & 2.14 & 0.0362 \\\text { D1 } & & 10.0 & 3.0 & 3.33 & 0.0015 \\\text { D2 } & & 25.0 & 7.2 & 3.47 & 0.0010 \\\text { D3 } & & 40.0 & 15.8 & 2.53 & 0.0140 \\\hline\end{array}$$

-At the 5 percent level of significance, is there a statistically significant trend in sales?

A) Yes, because 0.0362 < 0.05.
B) No, because 0.0362 > 0.01.
C) Yes, because 0.700 > 0.05.
D) Yes, because 2.14 >0.05.
E) both c and d

Question 49

Problems in forecasting include:

A) estimates becoming more reliable the further you forecast into the future
B) specification error
C) cyclical variation
D) both a and b
E) all of the above

Question 50

Refer to the following:
A forecaster used the regression equation
$Q _ { t } = a + b t + c _ { 1 } D _ { 1 } + c _ { 2 } D _ { 2 } + c _ { 3 } D _ { 3 }$
and quarterly sales data for 1996I-2013IV (t = 1, ..., 64) for an appliance manufacturer to obtain the results shown below. Q is quarterly sales, and
$D _ { 1 } , D _ { 2 }$ and
$D _ { 3 }$ are dummy variables for quarters I, II, and III.
$$\begin{array} { | l l l l l l } \hline \text { DEPENDENTVARIAELE: } & \text { aT } & \text { R-SQUARE } & \text { F-RATIO } & \text { P-VALUE ON F } \\\text { OESERVATIONS: } & 64 & \text { 0.8768 } & 107.982 & 0.0001 & \\& & \text { PARAMETER } & \text { STANDARD } & & \\\text { VARIAELE } & & \text { ESTIMATE } & \text { ERROR } & \text { T-RATIO } & \text { P-VALUE } \\\text { INTERCEPT } & & 30.0 & 12.8 & 2.34 & 0.0224 \\\text { T } & & 1.5 & 0.70 & 2.14 & 0.0362 \\\text { D1 } & & 10.0 & 3.0 & 3.33 & 0.0015 \\\text { D2 } & & 25.0 & 7.2 & 3.47 & 0.0010 \\\text { D3 } & & 40.0 & 15.8 & 2.53 & 0.0140 \\\hline\end{array}$$

-What is the estimated intercept of the trend line in the second quarter?

A) 25
B) 26.6
C) 55
D) 65
E) none of the above

Question 51

Refer to the following:
A forecaster used the regression equation
$Q _ { t } = a + b t + c _ { 1 } D _ { 1 } + c _ { 2 } D _ { 2 } + c _ { 3 } D _ { 3 }$
and quarterly sales data for 1996I-2013IV (t = 1, ..., 64) for an appliance manufacturer to obtain the results shown below. Q is quarterly sales, and
$D _ { 1 } , D _ { 2 }$ and
$D _ { 3 }$ are dummy variables for quarters I, II, and III.
$$\begin{array} { | l l l l l l } \hline \text { DEPENDENTVARIAELE: } & \text { aT } & \text { R-SQUARE } & \text { F-RATIO } & \text { P-VALUE ON F } \\\text { OESERVATIONS: } & 64 & \text { 0.8768 } & 107.982 & 0.0001 & \\& & \text { PARAMETER } & \text { STANDARD } & & \\\text { VARIAELE } & & \text { ESTIMATE } & \text { ERROR } & \text { T-RATIO } & \text { P-VALUE } \\\text { INTERCEPT } & & 30.0 & 12.8 & 2.34 & 0.0224 \\\text { T } & & 1.5 & 0.70 & 2.14 & 0.0362 \\\text { D1 } & & 10.0 & 3.0 & 3.33 & 0.0015 \\\text { D2 } & & 25.0 & 7.2 & 3.47 & 0.0010 \\\text { D3 } & & 40.0 & 15.8 & 2.53 & 0.0140 \\\hline\end{array}$$

-What is the estimated intercept of the trend line in the fourth quarter?

A) 0
B) 40
C) 55
D) 70
E) none of the above

Question 52

Refer to the following:
A forecaster used the regression equation
$Q _ { t } = a + b t + c _ { 1 } D _ { 1 } + c _ { 2 } D _ { 2 } + c _ { 3 } D _ { 3 }$
and quarterly sales data for 1996I-2013IV (t = 1, ..., 64) for an appliance manufacturer to obtain the results shown below. Q is quarterly sales, and
$D _ { 1 } , D _ { 2 }$ and
$D _ { 3 }$ are dummy variables for quarters I, II, and III.
$$\begin{array} { | l l l l l l } \hline \text { DEPENDENTVARIAELE: } & \text { aT } & \text { R-SQUARE } & \text { F-RATIO } & \text { P-VALUE ON F } \\\text { OESERVATIONS: } & 64 & \text { 0.8768 } & 107.982 & 0.0001 & \\& & \text { PARAMETER } & \text { STANDARD } & & \\\text { VARIAELE } & & \text { ESTIMATE } & \text { ERROR } & \text { T-RATIO } & \text { P-VALUE } \\\text { INTERCEPT } & & 30.0 & 12.8 & 2.34 & 0.0224 \\\text { T } & & 1.5 & 0.70 & 2.14 & 0.0362 \\\text { D1 } & & 10.0 & 3.0 & 3.33 & 0.0015 \\\text { D2 } & & 25.0 & 7.2 & 3.47 & 0.0010 \\\text { D3 } & & 40.0 & 15.8 & 2.53 & 0.0140 \\\hline\end{array}$$

-In any given year, quarterly sales tend to vary as follows:

A) Q_I > Q_II > Q_III > Q_IV
B) Q_I > Q_II > Q_IV > Q_III
C) Q_II > Q_III > Q_IV > Q_I
D) Q_III > Q_II > Q_I > Q_IV
E) Q_III > Q_IV > Q_II > Q_I

Question 53

Refer to the following:
A consulting firm estimates the following quarterly sales forecasting model:
$Q _ { t } = a + b t + c D$
The equation is estimated using quarterly data from 2003I-2013III (t = 1,..., 43). The variable D is a dummy variable for the second quarter where:
D = 1 in the second quarter, and 0 otherwise.
The results of the estimation are:
$\begin{array}{rllll}\text { DEPENDENT VARIABLE: } & \text { QT } & \text { R-SQUARE } & \text { F-RATIO } & \text { P-VALUE ONF } \\\text { OBSERVATIONS: } & 43 & 0.8644 & 127.5 & 0.0001\\\\\text { VARIABLE } & \text { PARAMETER } & \text { STANDARD } & \\&\text { ESTIMATE } & \text { ERROR } & \text { T-RATIO } & \text { P-VALUE } \\\text { INTERCEPT } & 22.5 & 9.32 & 2.41 & 0.0201 \\\text { T } & 1.86 & 0.55 & 3.38 & 0.0016 \\\text { D } & 2.0 & 0.71 & 2.82 & 0.0075\end{array}$

-Using the estimated trend line, what is the predicted level of sales in 2014I ?

A) 110.06
B) 106.20
C) 104.34
D) 102.2
E) none of the above

Question 54

Refer to the following:
A forecaster used the regression equation
$Q _ { t } = a + b t + c _ { 1 } D _ { 1 } + c _ { 2 } D _ { 2 } + c _ { 3 } D _ { 3 }$
and quarterly sales data for 1996I-2013IV (t = 1, ..., 64) for an appliance manufacturer to obtain the results shown below. Q is quarterly sales, and
$D _ { 1 } , D _ { 2 }$ and
$D _ { 3 }$ are dummy variables for quarters I, II, and III.
$$\begin{array} { | l l l l l l } \hline \text { DEPENDENTVARIAELE: } & \text { aT } & \text { R-SQUARE } & \text { F-RATIO } & \text { P-VALUE ON F } \\\text { OESERVATIONS: } & 64 & \text { 0.8768 } & 107.982 & 0.0001 & \\& & \text { PARAMETER } & \text { STANDARD } & & \\\text { VARIAELE } & & \text { ESTIMATE } & \text { ERROR } & \text { T-RATIO } & \text { P-VALUE } \\\text { INTERCEPT } & & 30.0 & 12.8 & 2.34 & 0.0224 \\\text { T } & & 1.5 & 0.70 & 2.14 & 0.0362 \\\text { D1 } & & 10.0 & 3.0 & 3.33 & 0.0015 \\\text { D2 } & & 25.0 & 7.2 & 3.47 & 0.0010 \\\text { D3 } & & 40.0 & 15.8 & 2.53 & 0.0140 \\\hline\end{array}$$

-Using the estimation results given above, the predicted level of sales in 2014I is _______ units.

A) 137.5
B) 139
C) 133.5
D) 132
E) none of the above

Question 55

Refer to the following:
A forecaster used the regression equation
$Q _ { t } = a + b t + c _ { 1 } D _ { 1 } + c _ { 2 } D _ { 2 } + c _ { 3 } D _ { 3 }$
and quarterly sales data for 1996I-2013IV (t = 1, ..., 64) for an appliance manufacturer to obtain the results shown below. Q is quarterly sales, and
$D _ { 1 } , D _ { 2 }$ and
$D _ { 3 }$ are dummy variables for quarters I, II, and III.
$$\begin{array} { | l l l l l l } \hline \text { DEPENDENTVARIAELE: } & \text { aT } & \text { R-SQUARE } & \text { F-RATIO } & \text { P-VALUE ON F } \\\text { OESERVATIONS: } & 64 & \text { 0.8768 } & 107.982 & 0.0001 & \\& & \text { PARAMETER } & \text { STANDARD } & & \\\text { VARIAELE } & & \text { ESTIMATE } & \text { ERROR } & \text { T-RATIO } & \text { P-VALUE } \\\text { INTERCEPT } & & 30.0 & 12.8 & 2.34 & 0.0224 \\\text { T } & & 1.5 & 0.70 & 2.14 & 0.0362 \\\text { D1 } & & 10.0 & 3.0 & 3.33 & 0.0015 \\\text { D2 } & & 25.0 & 7.2 & 3.47 & 0.0010 \\\text { D3 } & & 40.0 & 15.8 & 2.53 & 0.0140 \\\hline\end{array}$$

-Using a 5 percent significance level, these estimation results indicate that

A) sales in the first quarter are significantly greater than sales in any other quarter.
B) sales in the second quarter are significantly greater than sales in any other quarter.
C) sales in the third quarter are significantly greater than sales in any other quarter.
D) sales in the fourth quarter are significantly greater than sales in any other quarter.

Question 56

Refer to the following:
A forecaster used the regression equation
$Q _ { t } = a + b t + c _ { 1 } D _ { 1 } + c _ { 2 } D _ { 2 } + c _ { 3 } D _ { 3 }$
and quarterly sales data for 1996I-2013IV (t = 1, ..., 64) for an appliance manufacturer to obtain the results shown below. Q is quarterly sales, and
$D _ { 1 } , D _ { 2 }$ and
$D _ { 3 }$ are dummy variables for quarters I, II, and III.
$$\begin{array} { | l l l l l l } \hline \text { DEPENDENTVARIAELE: } & \text { aT } & \text { R-SQUARE } & \text { F-RATIO } & \text { P-VALUE ON F } \\\text { OESERVATIONS: } & 64 & \text { 0.8768 } & 107.982 & 0.0001 & \\& & \text { PARAMETER } & \text { STANDARD } & & \\\text { VARIAELE } & & \text { ESTIMATE } & \text { ERROR } & \text { T-RATIO } & \text { P-VALUE } \\\text { INTERCEPT } & & 30.0 & 12.8 & 2.34 & 0.0224 \\\text { T } & & 1.5 & 0.70 & 2.14 & 0.0362 \\\text { D1 } & & 10.0 & 3.0 & 3.33 & 0.0015 \\\text { D2 } & & 25.0 & 7.2 & 3.47 & 0.0010 \\\text { D3 } & & 40.0 & 15.8 & 2.53 & 0.0140 \\\hline\end{array}$$

-At the 5 percent level of significance, is there a statistically significant trend in sales?

A) No, because 1.5 < 2.66.
B) No, because 1.5 < 2.00.
C) No, because 2.14 < 2.66.
D) Yes, because 2.14 > 2.00.
E) none of the above

Question 57

Refer to the following:
The manufacturer of Beanie Baby dolls used quarterly price data for 2005I - 2013IV (t = 1, ..., 36) and the regression equation
$P _ { t } = a + b t + c _ { 1 } D 1 _ { t } + c _ { 2 } D 2 _ { t } + c _ { 3 } D 3 _ { t }$
to forecast doll prices in the year 2014.
$P _ { t }$ is the quarterly price of dolls, and
$D 1 _ { t } , D 2 _ { t }$ and
$D 3 _ { t }$ are dummy variables for quarters I, II, and III, respectively.
$\begin{array}{rllll}\text { DEPENDENT VARIABLE: } & \text { PT } & \text { R-SQUARE } & \text { F-RATIO } & \text { P-VALUE ON F } \\\text { OBSERVATIONS: } & 36 & 0.9078 & 76.34 & 0.0001\end{array}$

$\begin{array}{lllll}\text { VARIABLE } & \text { PARAMETER } & \text { STANDARD } & T-RATIO&P-VALUE \\\text { ESTERCEPT } & 24.0 & 6.20 & 3.87 & 0.0005 \\\text { T } & 0.800 & 0.240 & 3.33 & 0.0022 \\\text { D1 } & -8.0 & 2.60 & -3.08 & 0.0043 \\\text { D2 } & -6.00 & 1.80 & -3.33 & 0.0022 \\\text { D3 } & -4.0 & 0.60 & -6.67 & 0.0001\end{array}$

-At the 2 percent level of statistical significance, is there a statistically significant trend in the price of dolls?

A) Yes, because 0.0022 < 0.02.
B) No, because 0.0022 > 0.02.
C) Yes, because 0.800 > 0.02.
D) Yes, because 0.240 > 0.02.
E) Yes, because 3.33 > 0.02.

Question 58

Refer to the following:
A forecaster used the regression equation
$Q _ { t } = a + b t + c _ { 1 } D _ { 1 } + c _ { 2 } D _ { 2 } + c _ { 3 } D _ { 3 }$
and quarterly sales data for 1996I-2013IV (t = 1, ..., 64) for an appliance manufacturer to obtain the results shown below. Q is quarterly sales, and
$D _ { 1 } , D _ { 2 }$ and
$D _ { 3 }$ are dummy variables for quarters I, II, and III.
$$\begin{array} { | l l l l l l } \hline \text { DEPENDENTVARIAELE: } & \text { aT } & \text { R-SQUARE } & \text { F-RATIO } & \text { P-VALUE ON F } \\\text { OESERVATIONS: } & 64 & \text { 0.8768 } & 107.982 & 0.0001 & \\& & \text { PARAMETER } & \text { STANDARD } & & \\\text { VARIAELE } & & \text { ESTIMATE } & \text { ERROR } & \text { T-RATIO } & \text { P-VALUE } \\\text { INTERCEPT } & & 30.0 & 12.8 & 2.34 & 0.0224 \\\text { T } & & 1.5 & 0.70 & 2.14 & 0.0362 \\\text { D1 } & & 10.0 & 3.0 & 3.33 & 0.0015 \\\text { D2 } & & 25.0 & 7.2 & 3.47 & 0.0010 \\\text { D3 } & & 40.0 & 15.8 & 2.53 & 0.0140 \\\hline\end{array}$$

-The estimated QUARTERLY increase in sales is ______ units, and the estimated ANNUAL increase in sales is ______ units.

A) 1.5; 6
B) 1.4; 4
C) 30; 4
D) 1.5; 40
E) none of the above

Question 59

Refer to the following:
The manufacturer of Beanie Baby dolls used quarterly price data for 2005I - 2013IV (t = 1, ..., 36) and the regression equation
$P _ { t } = a + b t + c _ { 1 } D 1 _ { t } + c _ { 2 } D 2 _ { t } + c _ { 3 } D 3 _ { t }$
to forecast doll prices in the year 2014.
$P _ { t }$ is the quarterly price of dolls, and
$D 1 _ { t } , D 2 _ { t }$ and
$D 3 _ { t }$ are dummy variables for quarters I, II, and III, respectively.
$\begin{array}{rllll}\text { DEPENDENT VARIABLE: } & \text { PT } & \text { R-SQUARE } & \text { F-RATIO } & \text { P-VALUE ON F } \\\text { OBSERVATIONS: } & 36 & 0.9078 & 76.34 & 0.0001\end{array}$

$\begin{array}{lllll}\text { VARIABLE } & \text { PARAMETER } & \text { STANDARD } & T-RATIO&P-VALUE \\\text { ESTERCEPT } & 24.0 & 6.20 & 3.87 & 0.0005 \\\text { T } & 0.800 & 0.240 & 3.33 & 0.0022 \\\text { D1 } & -8.0 & 2.60 & -3.08 & 0.0043 \\\text { D2 } & -6.00 & 1.80 & -3.33 & 0.0022 \\\text { D3 } & -4.0 & 0.60 & -6.67 & 0.0001\end{array}$

-What is the estimated intercept of the trend line in the 1st quarter?

A) 24
B) -8
C) 32
D) 16
E) none of the above

Question 60

Refer to the following:
A consulting firm estimates the following quarterly sales forecasting model:
$Q _ { t } = a + b t + c D$
The equation is estimated using quarterly data from 2003I-2013III (t = 1,..., 43). The variable D is a dummy variable for the second quarter where:
D = 1 in the second quarter, and 0 otherwise.
The results of the estimation are:
$\begin{array}{rllll}\text { DEPENDENT VARIABLE: } & \text { QT } & \text { R-SQUARE } & \text { F-RATIO } & \text { P-VALUE ONF } \\\text { OBSERVATIONS: } & 43 & 0.8644 & 127.5 & 0.0001\\\\\text { VARIABLE } & \text { PARAMETER } & \text { STANDARD } & \\&\text { ESTIMATE } & \text { ERROR } & \text { T-RATIO } & \text { P-VALUE } \\\text { INTERCEPT } & 22.5 & 9.32 & 2.41 & 0.0201 \\\text { T } & 1.86 & 0.55 & 3.38 & 0.0016 \\\text { D } & 2.0 & 0.71 & 2.82 & 0.0075\end{array}$

-What is the estimated intercept of the trend line in the third quarter?

A) 22.50
B) 24.50
C) 24.36
D) 2.00
E) none of the above

Question 61

Refer to the following:
The manufacturer of Beanie Baby dolls used quarterly price data for 2005I - 2013IV (t = 1, ..., 36) and the regression equation
$P _ { t } = a + b t + c _ { 1 } D 1 _ { t } + c _ { 2 } D 2 _ { t } + c _ { 3 } D 3 _ { t }$
to forecast doll prices in the year 2014.
$P _ { t }$ is the quarterly price of dolls, and
$D 1 _ { t } , D 2 _ { t }$ and
$D 3 _ { t }$ are dummy variables for quarters I, II, and III, respectively.
$\begin{array}{rllll}\text { DEPENDENT VARIABLE: } & \text { PT } & \text { R-SQUARE } & \text { F-RATIO } & \text { P-VALUE ON F } \\\text { OBSERVATIONS: } & 36 & 0.9078 & 76.34 & 0.0001\end{array}$

$\begin{array}{lllll}\text { VARIABLE } & \text { PARAMETER } & \text { STANDARD } & T-RATIO&P-VALUE \\\text { ESTERCEPT } & 24.0 & 6.20 & 3.87 & 0.0005 \\\text { T } & 0.800 & 0.240 & 3.33 & 0.0022 \\\text { D1 } & -8.0 & 2.60 & -3.08 & 0.0043 \\\text { D2 } & -6.00 & 1.80 & -3.33 & 0.0022 \\\text { D3 } & -4.0 & 0.60 & -6.67 & 0.0001\end{array}$

-In any given year price tends to vary from quarter to quarter as follows:

A) P_I > P_II > P_III > P_IV
B) P_I > P_IV > P_III > P_II
C) P_II > P_III > P_IV > P_I
D) P_III > P_I > P_II > P_IV
E) P_IV > P_III > P_II > P_I

Question 62

Refer to the following:
The manufacturer of Beanie Baby dolls used quarterly price data for 2005I - 2013IV (t = 1, ..., 36) and the regression equation
$P _ { t } = a + b t + c _ { 1 } D 1 _ { t } + c _ { 2 } D 2 _ { t } + c _ { 3 } D 3 _ { t }$
to forecast doll prices in the year 2014.
$P _ { t }$ is the quarterly price of dolls, and
$D 1 _ { t } , D 2 _ { t }$ and
$D 3 _ { t }$ are dummy variables for quarters I, II, and III, respectively.
$\begin{array}{rllll}\text { DEPENDENT VARIABLE: } & \text { PT } & \text { R-SQUARE } & \text { F-RATIO } & \text { P-VALUE ON F } \\\text { OBSERVATIONS: } & 36 & 0.9078 & 76.34 & 0.0001\end{array}$

$\begin{array}{lllll}\text { VARIABLE } & \text { PARAMETER } & \text { STANDARD } & T-RATIO&P-VALUE \\\text { ESTERCEPT } & 24.0 & 6.20 & 3.87 & 0.0005 \\\text { T } & 0.800 & 0.240 & 3.33 & 0.0022 \\\text { D1 } & -8.0 & 2.60 & -3.08 & 0.0043 \\\text { D2 } & -6.00 & 1.80 & -3.33 & 0.0022 \\\text { D3 } & -4.0 & 0.60 & -6.67 & 0.0001\end{array}$

-At the 2 percent level of statistical significance, the results indicate that price in the ________ quarter is significantly lower than in any other quarter.

A) 1st
B) 2nd
C) 3rd
D) 4th

Question 63

forecaster used the following regression equation $Q _ { t } = a + b t + c _ { 1 } D _ { 1 } + c _ { 2 } D _ { 2 } + c _ { 3 } D _ { 3 }$ and quarterly sales data during 2005II-2013IV (t = 1, ..., 35) for an appliance manufacturer to obtain the estimation results shown below. Q is quarterly sales, and $D _ { 1 } , D _ { 2 }$ ,and $D _ { 3 }$ are seasonal dummy variables for quarters I, II, and III.
$$\begin{array} { l l l l l l } \text { DEPENDENTVARIAELE: } & \text { QT } & \text { R-SQUARE } & \text { F-RATIO } & \text { P-VALUE ON F } \\\text { OESERVATIONS: } & \text { 35 } & \text { 0.9219 } & \text { 88.54 } & \mathbf { 0 . 0 0 0 1 } & \\& & \text { PARAMETER } & \text { STANDARD } & & \\\text { VARIAELE } & & \text { ESTIMATE } & \text { ERROR } & \text { T-RATIO } & \text { P-VALUE } \\\text { INTERCEPT } & & 21.0 & \mathbf { 6 . 2 } & \mathbf { 3 . 3 9 } & \mathbf { 0 . 0 0 1 9 } \\\text { T } & & \mathbf { 0 . 9 0 } & \mathbf { 0 . 2 4 } & \mathbf { 3 . 7 5 } & \mathbf { 0 . 0 0 0 7 } \\\text { D9 } & & - \mathbf { 8 . 0 } & \mathbf { 2 . 6 0 } & - \mathbf { 3 . 0 8 } & \mathbf { 0 . 0 0 4 3 } \\\text { D2 } & & - \mathbf { 6 . 0 } & 1.80 & - \mathbf { 3 . 3 3 } & \mathbf { 0 . 0 0 2 2 } \\\text { D3 } & & - 4.0 & \mathbf { 0 . 6 0 } & \mathbf { - 6 . 6 7 } & \mathbf { 0 . 0 0 0 1 }\end{array}$$
a. At the 2 percent level of significance, the critical value of the t-statistic is _______.
The parameter estimate of a ________ (is, is not) statistically significant.
The parameter estimate of b ________ (is, is not) statistically significant.
The parameter estimate of
$c _ { 1 }$ ________ (is, is not) statistically significant.
The parameter estimate of
$c _ { 2 }$ ________ (is, is not) statistically significant.
The parameter estimate of
$c _ { 3 }$ ________ (is, is not) statistically significant.
b. The statistical estimates indicate a(n) ___________ (upward, downward) trend in sales of _________ units per quarter year.
c. The estimated intercepts for each of the four quarters are:
Intercept for quarter 1 is __________.
Intercept for quarter 2 is __________.
Intercept for quarter 3 is __________.
Intercept for quarter 4 is __________.
d. The forecasted sales for the 1^st quarter of 2014 are ___________ units.
The forecasted sales for the 2^nd quarter of 2014 are ___________ units.
The forecasted sales for the 3^rd quarter of 2014 are ___________ units.
The forecasted sales for the 4^th quarter of 2014 are ___________ units.

Question 64

Refer to the following:
The manufacturer of Beanie Baby dolls used quarterly price data for 2005I - 2013IV (t = 1, ..., 36) and the regression equation
$P _ { t } = a + b t + c _ { 1 } D 1 _ { t } + c _ { 2 } D 2 _ { t } + c _ { 3 } D 3 _ { t }$
to forecast doll prices in the year 2014.
$P _ { t }$ is the quarterly price of dolls, and
$D 1 _ { t } , D 2 _ { t }$ and
$D 3 _ { t }$ are dummy variables for quarters I, II, and III, respectively.
$\begin{array}{rllll}\text { DEPENDENT VARIABLE: } & \text { PT } & \text { R-SQUARE } & \text { F-RATIO } & \text { P-VALUE ON F } \\\text { OBSERVATIONS: } & 36 & 0.9078 & 76.34 & 0.0001\end{array}$

$\begin{array}{lllll}\text { VARIABLE } & \text { PARAMETER } & \text { STANDARD } & T-RATIO&P-VALUE \\\text { ESTERCEPT } & 24.0 & 6.20 & 3.87 & 0.0005 \\\text { T } & 0.800 & 0.240 & 3.33 & 0.0022 \\\text { D1 } & -8.0 & 2.60 & -3.08 & 0.0043 \\\text { D2 } & -6.00 & 1.80 & -3.33 & 0.0022 \\\text { D3 } & -4.0 & 0.60 & -6.67 & 0.0001\end{array}$

-Using the estimated time-series regression, predicted price in the 2nd quarter of 2014 is

A) $48.40
B) $54.40
C) $40.40
D) $51.40
E) none of the above

Question 65

Refer to the following:
The manufacturer of Beanie Baby dolls used quarterly price data for 2005I - 2013IV (t = 1, ..., 36) and the regression equation
$P _ { t } = a + b t + c _ { 1 } D 1 _ { t } + c _ { 2 } D 2 _ { t } + c _ { 3 } D 3 _ { t }$
to forecast doll prices in the year 2014.
$P _ { t }$ is the quarterly price of dolls, and
$D 1 _ { t } , D 2 _ { t }$ and
$D 3 _ { t }$ are dummy variables for quarters I, II, and III, respectively.
$\begin{array}{rllll}\text { DEPENDENT VARIABLE: } & \text { PT } & \text { R-SQUARE } & \text { F-RATIO } & \text { P-VALUE ON F } \\\text { OBSERVATIONS: } & 36 & 0.9078 & 76.34 & 0.0001\end{array}$

$\begin{array}{lllll}\text { VARIABLE } & \text { PARAMETER } & \text { STANDARD } & T-RATIO&P-VALUE \\\text { ESTERCEPT } & 24.0 & 6.20 & 3.87 & 0.0005 \\\text { T } & 0.800 & 0.240 & 3.33 & 0.0022 \\\text { D1 } & -8.0 & 2.60 & -3.08 & 0.0043 \\\text { D2 } & -6.00 & 1.80 & -3.33 & 0.0022 \\\text { D3 } & -4.0 & 0.60 & -6.67 & 0.0001\end{array}$

-What is the estimated intercept of the trend line in the 4th quarter?

A) 22.8
B) 16
C) 18
D) 20
E) none of the above

Question 66

Refer to the following:
The manufacturer of Beanie Baby dolls used quarterly price data for 2005I - 2013IV (t = 1, ..., 36) and the regression equation
$P _ { t } = a + b t + c _ { 1 } D 1 _ { t } + c _ { 2 } D 2 _ { t } + c _ { 3 } D 3 _ { t }$
to forecast doll prices in the year 2014.
$P _ { t }$ is the quarterly price of dolls, and
$D 1 _ { t } , D 2 _ { t }$ and
$D 3 _ { t }$ are dummy variables for quarters I, II, and III, respectively.
$\begin{array}{rllll}\text { DEPENDENT VARIABLE: } & \text { PT } & \text { R-SQUARE } & \text { F-RATIO } & \text { P-VALUE ON F } \\\text { OBSERVATIONS: } & 36 & 0.9078 & 76.34 & 0.0001\end{array}$

$\begin{array}{lllll}\text { VARIABLE } & \text { PARAMETER } & \text { STANDARD } & T-RATIO&P-VALUE \\\text { ESTERCEPT } & 24.0 & 6.20 & 3.87 & 0.0005 \\\text { T } & 0.800 & 0.240 & 3.33 & 0.0022 \\\text { D1 } & -8.0 & 2.60 & -3.08 & 0.0043 \\\text { D2 } & -6.00 & 1.80 & -3.33 & 0.0022 \\\text { D3 } & -4.0 & 0.60 & -6.67 & 0.0001\end{array}$

-Using the estimated time-series regression, predicted price in the 1st quarter of 2014 is

A) $53.60.
B) $45.60.
C) $56.00.
D) $37.60.
E) none of the above

Question 67

Refer to the following:
The manufacturer of Beanie Baby dolls used quarterly price data for 2005I - 2013IV (t = 1, ..., 36) and the regression equation
$P _ { t } = a + b t + c _ { 1 } D 1 _ { t } + c _ { 2 } D 2 _ { t } + c _ { 3 } D 3 _ { t }$
to forecast doll prices in the year 2014.
$P _ { t }$ is the quarterly price of dolls, and
$D 1 _ { t } , D 2 _ { t }$ and
$D 3 _ { t }$ are dummy variables for quarters I, II, and III, respectively.
$\begin{array}{rllll}\text { DEPENDENT VARIABLE: } & \text { PT } & \text { R-SQUARE } & \text { F-RATIO } & \text { P-VALUE ON F } \\\text { OBSERVATIONS: } & 36 & 0.9078 & 76.34 & 0.0001\end{array}$

$\begin{array}{lllll}\text { VARIABLE } & \text { PARAMETER } & \text { STANDARD } & T-RATIO&P-VALUE \\\text { ESTERCEPT } & 24.0 & 6.20 & 3.87 & 0.0005 \\\text { T } & 0.800 & 0.240 & 3.33 & 0.0022 \\\text { D1 } & -8.0 & 2.60 & -3.08 & 0.0043 \\\text { D2 } & -6.00 & 1.80 & -3.33 & 0.0022 \\\text { D3 } & -4.0 & 0.60 & -6.67 & 0.0001\end{array}$

-At the 2 percent level of statistical significance, the estimation results indicate that price in the ________ quarter is significantly higher than in any other quarter.

A) 1st
B) 2nd
C) 3rd
D) 4th