A construction company builds permanent docks and seawalls along the southern shore of Long Island, New York. Although the firm has been in business only five years, revenue has increased from $298,000 in the first year of operation to $1,079,000 in the most recent year. The following data show the quarterly sales revenue in thousands of dollars. Quarter Year 1 Year 2 Year 3 20 37 75 95 131 175 O 500 450 1 (a) Construct a time series plot. 400 2 330 3 4 8 245 21 quarter 3 forecast quarter 4 forecast 150 326 43 400 400+ 350+ 300 300 300 250 250 250 250 200 My www ~ L 200 200 200 150 150 150 150 100 100- 100- 30 50 30 12341234123412341234 12341234123412341234 12341234123412341234 12341234123412341234 Year 1 Year 2 Year 3 Year 4 Year 5 Year 1 Year 2 Year 3 Year 4 Year 5 Year 1 Year 2 Year 3 Year 4 Year 5 Year 1 Year 2 Year 3 Year 4 Year 5 Year/Quarter Year Quarter Year/Quarter Year Quarter s[ $[ $ $ Year 4 Year 5 92 176 277 445 197 384 77 181 500 450 What type of pattern exists in the data? The time series plot shows both a linear trend and seasonal effects. O The time series plot shows only seasonal effects. O The time series plot shows only a linear trend. O The time series plot shows neither a linear trend nor seasonal effects. 350 Based only on the seasonal effects in the data, compute estimates of quarterly sales (in $1,000s) for year 6. quarter 1 forecast thousand quarter 2 forecast thousand thousand thousand 500 450 400 350 300 100 50 500 O (b) Use the following dummy variables to develop an estimated regression equation for the time series data (in $1,000s) to account for seasonal effects in the data. x₂-1 if quarter 1, 0 otherwise; x₂-1 if quarter 2, 0 otherwise; x₂-1 if quarter 3, 0 otherwise. 9- 450 Ⓡ Activate Windows Go to Settings to activate Windows