Answered: Q. Rubax, a U.S. manufacturer of…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Q. Rubax, a U.S. manufacturer of athletic shoes, estimates the following linear trend model for show sales:

Qt = a + bt + c1D1 + c2D2 + c3D3

Qt = sales of athletic shoes in the tth quarter

t = 1, 2,..., 28 [2014(I), 2014(II),....,2020[IV)]

D1 = 1 if t is quarter I (winter); 0 otherwise
D2 = 1 if t is quarter II (spring); 0 otherwise
D3 = 1 if t is quarter III (summer); 0 otherwise

The regression analysis produces the following results:

a. Is there sufficient statistical evidence of an upward trend in shoe sales?

b. Do these data indicate a statistically significant seasonal pattern of sales of Rubax shoes? If so, what is the seasonal pattern exhibited by the data?

c. Using the estimated forecast equation, forecast sales of Rubax shoes for 2021(III) and 2022(II).

d. How might you improve this forecast equation?

Thank you!

Dependent Variable: QT
Observations: 28
Variable
Intercept
T
D1
D2
D3
Parameter
Estimate
184500
2100
3280
6250
7010
R-Square
0.9651
Standard
Error
10310
340
1510
2220
1580
F-Ration
159.01
T-Ratio
17.90
6.18
2.17
2.82
4.44
P-Value on F
0.0001
P-Value
0.0001
0.0001
0.0404
0.0098
0.0002

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