Sales in a company are $196 million in 2009 and increase to $198 million in 2010. a. Compute the percentage increase in sales using the usual formula 11eb817c_77ac_7295_84e6_0561067ec2b3_SM2685_00 Compare this value to the approximation 11eb817c_77ac_7296_84e6_d7606cf32447_SM2685_00 b. Repeat (a) assuming Sales 2010 = 205, Sales 2010 = 250, and Sales 2010 = 500. c. How good is the approximation when the change is small Does the quality of the approximation deteriorate as the percentage change increases

Introduction to Econometrics 3rd Edition by James Stock, Mark Watson

Edition 3ISBN: 978-9352863501

Introduction to Econometrics 3rd Edition by James Stock, Mark Watson

Edition 3ISBN: 978-9352863501

Exercise 2

Sales in a company are $196 million in 2009 and increase to $198 million in 2010.
a. Compute the percentage increase in sales using the usual formula

Compare this value to the approximation

b. Repeat (a) assuming Sales 2010 = 205, Sales 2010 = 250, and Sales 2010 = 500.
c. How good is the approximation when the change is small Does the quality of the approximation deteriorate as the percentage change increases

Explanation

Verified

(a)
The sales of a company for 2013 are...