A consulting firm estimates the following quarterly sales forecasting model: The equation is estimated using quarterly data from 2005I-2015III t = 1,...,43).The variable D is a dummy variable for the second quarter where: D = 1 in the second quarter,and 0 otherwise.
The results of the estimation are:
Given the above,these estimates indicate that the second quarter change in sales is
A)22.5 units higher in the second quarter than in the other three quarters.
B)1.86 units higher in the second quarter than in the other three quarters.
C)2.00 units higher in the second quarter than in the other three quarters.
D)24.5 units higher in the second quarter than in the other three quarters.

Question

A consulting firm estimates the following quarterly sales forecasting model:  The equation is estimated using quarterly data from 2005I-2015III t = 1,...,43).The variable D is a dummy variable for the second quarter where: D = 1 in the second quarter,and 0 otherwise.
The results of the estimation are:
 Given the above,these estimates indicate that the second quarter change in sales is
A)22.5 units higher in the second quarter than in the other three quarters. 
B)1.86 units higher in the second quarter than in the other three quarters. 
C)2.00 units higher in the second quarter than in the other three quarters. 
D)24.5 units higher in the second quarter than in the other three quarters.

Quizplus · Accepted Answer

The coefficient estimate for the D variable is 2.00. Since D equals 1 in the second quarter and 0 in all other quarters, this means that sales in the second quarter are expected to be 2.00 units higher than in the other three quarters.

A Consulting Firm Estimates the Following Quarterly Sales Forecasting Model