Question

In a simple time-series regression that you've run., where sales were linearly related to time t, the estimated tv coefficient is negative and statistically significant. This suggests that as time goes on, sales are expected to increase but not as quickly as they've increased in the past.

(a).True
(b).False

Answer 1

The given statement is false because a negative and significant time coefficient indicates a decrease in sales over time. Using the provided sales growth model, predicted sales on day 60 and 90 would be $249.12k and $323.52k, respectively.

Step-by-step explanation:

The student's question pertains to the interpretation of a time-series regression analysis where the coefficient associated with time (t) is negative and statistically significant. If the coefficient for t is negative and significant, this indicates that as time increases, sales are expected to decrease, not increase. Therefore, the statement suggesting that sales will increase but at a decreasing rate is false—in reality, the model predicts a decline in sales over time.

To answer the exercise regarding the electronics retailer, we can use the given model: ŷ = 101.32 + 2.48x. For predictions:

• On day 60, predicted sales would be ŷ = 101.32 + (2.48 × 60), which equals $249.12 thousand.
• On day 90, predicted sales would be ŷ = 101.32 + (2.48 × 90), which equals $323.52 thousand.