Question

A trend line has been fitted to a company's annual sales. The trend is given by yt = 50 + 5t, where t is the time index (t = 1, 2, . . . , n) and yt is annual sales (in millions of dollars). The implication of this trend line is that sales are expected to increase:________.

A. by exactly 5 percent every year.
B. by an average of $5 million per year.
C. by $5 million every year.
D. by an average of 5 percent per year.

Answer 1

B. by an average of $5 million per year

Step-by-step explanation:

Slope co-efficient for t = 5, indicates that for every year, there will on average increase of dollar 5 million in sales. The interpretation of trend line is "Sales will increase by $5 million every year"