Economists want to forecast the demand for automobiles (cars,SUVs and light trucks)as a function of gas prices.Historical data has shown that this relationship can be approximated by a straight line.Which forecasting technique is best suited in this situation?
A)Weighted moving average
B)Exponential smoothing
C)Simple moving average
D)Linear regression

Question

Quizplus · Accepted Answer

Linear regression is the best-suited forecasting technique in this situation because it is used to predict the value of a variable based on the value of another variable when the relationship between the two variables can be approximated by a straight line. In this case, the demand for automobiles is being forecasted as a function of gas prices, which fits the criteria for using linear regression.

Economists Want to Forecast the Demand for Automobiles (Cars,SUVs and Light