A time series regression equation for a surfboard manufacturing company in Australia is given below: Y = 35 + 4Q₁ + 0.5Q₃ + 8Q₄ + 3t With t in quarters and the origin is December 2010 and Q₁ is the indicator variable for March, Q₃ is the indicator variable for September and Q₄ is the indicator variable for December. Which of the following statements is correct regarding the coefficient of Q₄? A) This company expects to sell 8 more surfboards in the December quarter than in the March quarter or the September quarter. B) This company expects to sell 8 more surfboards in the December quarter than in the June quarter. C) This company expects to sell 8 more surfboards in the June quarter than in the December quarter. D) None of these choices are correct.

Question

Quizplus · Accepted Answer

The coefficient of Q₄ indicates the additional number of surfboards expected to be sold in the December quarter compared to the baseline quarter, which is the June quarter (since Q₂ is not included in the equation).

A Time Series Regression Equation for a Surfboard Manufacturing Company