Based on quarterly data collected over the last four years,the following regression equation was found to forecast the quarterly demand for the number of new copies of an economics textbook: = 3,305 - 665Qtr1 - 1,335Qtr2 + 305Qtr3,where Qtr1,Qtr2,and Qtr3 are dummy variables corresponding to Quarters 1,2,and 3. Which of the following is not true?
A) The demand in Quarter 1 is on average 670 copies higher than in Quarter 2.
B) The demand in Quarter 3 is on average 305 copies higher than in Quarter 4.
C) The demand in Quarter 1 is on average 360 copies lower than in Quarter 3.
D) The demand in Quarter 2 is on average 1,640 copies lower than in Quarter 3.

Question

Based on quarterly data collected over the last four years,the following regression equation was found to forecast the quarterly demand for the number of new copies of an economics textbook:  = 3,305 - 665Qtr1 - 1,335Qtr2 + 305Qtr3,where Qtr1,Qtr2,and Qtr3 are dummy variables corresponding to Quarters 1,2,and 3. Which of the following is not true?
A) The demand in Quarter 1 is on average 670 copies higher than in Quarter 2. 
B) The demand in Quarter 3 is on average 305 copies higher than in Quarter 4. 
C) The demand in Quarter 1 is on average 360 copies lower than in Quarter 3. 
D) The demand in Quarter 2 is on average 1,640 copies lower than in Quarter 3.

Quizplus · Accepted Answer

From the regression equation, we can see that the coefficient for Qtr1 is -665, which means that demand is expected to be lower in Quarter 1 compared to the base quarter (Quarter 4). Similarly, the coefficient for Qtr2 is -1,335, indicating that demand is expected to be lower in Quarter 2 compared to the base quarter. The coefficient for Qtr3 is 305, which means that demand is expected to be higher in Quarter 3 compared to the base quarter.

A) The demand in Quarter 1 is on average 670 copies higher than in Quarter 2.
B) The demand in Quarter 3 is on average 305 copies higher than in Quarter 4.
C) The demand in Quarter 1 is on average 360 copies lower than in Quarter 3.
D) The demand in Quarter 2 is on average 1,640 copies lower than in Quarter 3.

B) The demand in Quarter 3 is on average 305 copies higher than in Quarter 4: This statement is true as the coefficient for Qtr3 is positive (305), indicating that demand is expected to be higher in Quarter 3 compared to Quarter 4 (the base quarter).

C) The demand in Quarter 1 is on average 360 copies lower than in Quarter 3: This statement is not true as the coefficient for Qtr1 is negative (-665) and the coefficient for Qtr3 is positive (305), indicating that demand is expected to be lower in Quarter 1 compared to Quarter 3 (not higher).

D) The demand in Quarter 2 is on average 1,640 copies lower than in Quarter 3: This statement is true as the coefficient for Qtr2 is negative (-1,335) and the coefficient for Qtr3 is positive (305), indicating that demand is expected to be lower in Quarter 2 compared to Quarter 3.

Based on Quarterly Data Collected Over the Last Four Years,the