Exhibit 18.6.Based on quarterly data collected over the last 5 years,the following regression equation was found to forecast the quarterly demand for the number of new copies of a business statistics textbook: , where Qtr1,Qtr2 and Qtr3 are dummy variables corresponding to Quarters 1,2 and 3,and t = time period.
Refer to Exhibit 18.6.For a given year,the demand in Quarter 3 is on average
A)1749 copies lower than in Quarter 2.
B)303 copies higher than in Quarter 2.
C)1775 copies higher than in Quarter 2.
D)1446 copies higher than in Quarter 2.

Question

Exhibit 18.6.Based on quarterly data collected over the last 5 years,the following regression equation was found to forecast the quarterly demand for the number of new copies of a business statistics textbook:  , where Qtr1,Qtr2 and Qtr3 are dummy variables corresponding to Quarters 1,2 and 3,and t = time period.
Refer to Exhibit 18.6.For a given year,the demand in Quarter 3 is on average
A)1749 copies lower than in Quarter 2. 
B)303 copies higher than in Quarter 2. 
C)1775 copies higher than in Quarter 2. 
D)1446 copies higher than in Quarter 2.

Quizplus · Accepted Answer

The coefficient for Qtr2 is 303 in the regression equation, which means that demand in Quarter 2 is on average 303 copies higher than in Quarter 1. The coefficient for Qtr3 is 1775, which means that demand in Quarter 3 is on average 1775 copies higher than in Quarter 1 (or 1775 - 303 = 1472 copies higher than in Quarter 2). Therefore, the demand in Quarter 3 is, on average, 1775 copies higher than in Quarter 2.