Question

The best interpretation of the coefficient of Q2 (-0.054) in the regression equation is:_________.

a) the revenues in the second quarter of a year is approximately 5.4% lower than the average over all 4 quarters.
b) the revenues in the second quarter of a year is approximately 5.4% lower than it would be during the fourth quarter.
c) the revenues in the second quarter of a year is approximately 11.69% lower than it would be during the fourth quarter.
d) the revenues in the second quarter of a year is approximately 11.69% lower than the average over all 4 quarters.

Answer 1

The correct answer is (b) the revenues in the second quarter of a year is approximately 5.4% lower than it would be during the fourth quarter

Step-by-step explanation:

Solution:

Given that

Log₁₀ Y = 6.012 + 0.012 X - 0.129 Q₁

= -0.054 Q₂ + 0.098 Q₃

Now,

Given that X =0

We substitute for Q₁ = 1

Thus,

Y = 6.012 + 0.012 (0) - 0.129 (1)

= -0.054 (0) + 0.098 (0)

= 6.012 - 0.129

=5.973

So

Q₂ = 1

Y = 6.102 - 0.054 (1) + 0.012 (0)

= - 0.129 (0) + 0.098 (0)

= 6.012 - 0.054

= 6.048

For Q₃=1

Y = 6.012 + 0.012 (0) - 0.129 (0)

= -0.054 (0) + 0.098 (1)

= 6.102 + 0.098

=6.2

From the given question, the option b is correct.

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