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 20010I-2020III (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: Using the estimated trend line above,what is the predicted level of sales in 2020IV ?
A)110.06
B)106.20
C)104.34
D)102.2
E)none of the above

Question

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 20010I-2020III (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:  Using the estimated trend line above,what is the predicted level of sales in 2020IV ?
A)110.06 
B)106.20 
C)104.34 
D)102.2 
E)none of the above

Quizplus · Accepted Answer

We need to use the estimated forecasting model to predict sales in 2020IV, which is essentially plugging in t=44 (since the first quarter of 2010 corresponds to t=1 and we have data up to the third quarter of 2020, which corresponds to t=43).

Substituting the values we have, we get:

Q = 16.95 + 2.16(44) - 5.08 = 104.34

Thus, the predicted level of sales in 2020IV is 104.34.

Therefore, the best choice is C.

A Consulting Firm Estimates the Following Quarterly Sales Forecasting Model Qt=a+bt+cDQ _ { t } = a + b t + c DQt​=a+bt+cD

A Consulting Firm Estimates the Following Quarterly Sales Forecasting Model $Q _ { t } = a + b t + c D$