Suppose the estimated quadratic model y_t = 500 + 20t

Question

Suppose the estimated quadratic model y_t = 500 + 20t - t² is the best-fitting trend of sales of XYZ Inc. using data for the past 20 years (t = 1, 2, …, 20). Which statement is incorrect? A)Sales are increasing by about 20 units per year. B)The turning point would be in period 10. C)Latest year sales are no better than in year zero. D)The trend was higher in year 10 than in year 20.

Quizplus · Accepted Answer

The statement is incorrect because the quadratic term (-t^2) indicates that sales are not increasing by a constant amount each year; instead, they initially increase and then decrease after reaching a peak.

Suppose the Estimated Quadratic Model Yt = 500 + 20t