Exam 4: Estimating and Forecasting Demand

Suppose that the "goodness of fit" of an equation is nearly perfect.What is the value of the R2 statistic in this case?

Suppose that in some regression,the R2‚ = 0.945,the number of observations is 14,and the number of coefficients is 5.What is the adjusted R2? (round off your answer up to three decimal places)

The Dodge City Bank is planning its loans for the next several years,and is using a model of loan demand developed from past experience.Fred Smith is responsible for developing the mortgage loan component of total loan demand.Fred estimates the following equation using 14 years of data: Q = 50 − 0.2P − 0.2D + 0.3Y + 0.15H, R² = 0.844 (17)(0.13)(0.16)(0.08)(0.06) Here,Q denotes mortgage loan demand (in million dollars),P denotes the prime interest rate,D is the discount rate,Y is per capita income (in thousand dollars),and H is an index of average city housing prices (in thousand dollars).The standard error of the regression is 22,and standard errors of the coefficients are shown in parentheses.(At 95% confidence level,the relevant t-statistic is 1.83 for 9 degrees of freedom. ) (a)Fred thinks that the discount rate will be 6% in the next year,the prime rate will be 7.75%,per capita income in Dodge City will be $21,000,and housing prices will be $165,000.How many loans can Dodge City Bank expect to make in the next year?

The difference between the predicted value and the actual value of a variable in a regression analysis is called:

Which of the following statements is correct?

Which of the following is true of the R-squared statistic?

Calculate the standard error of a regression equation if the sum of squared errors of the observations is 625 and the degrees of freedom in the regression is 25.

INSITE Corporation produces advanced analytic software for computer simulations called "Model It".Based on a regression analysis of product sales in the first year after launch,INSITE's marketing department estimates the demand for "Model It" to be: Q_M = 1,200 - 8P_M + 4P_S with adjusted R² = 0.65,and with all of the above coefficients statistically significant.Here,Q_M denotes units sold of "Model It" software,P_M denotes "Model It's" price,and P_S denotes the price of a best-selling statistical software package (with both prices in dollars). (a)Currently,P_M = $200 and P_S = $300.What is the predicted demand for "Model It" software? The price P_S has been unchanged (at $300)during the last 6 months.Given this information,write down the equation for "Model It's" demand curve (with Q_M as the left-side variable).Also determine its inverse demand curve (with P_M as the left-side variable).

Serial correlation occurs when:

Gold Tracker monitors the price of precious metals and has developed a forecasting model for the sales of gold: Q = 4,000 − 0.01P + 1.5C − 1.25X + 1.0S,where Q = weekly sales of gold (in millions of ounces),P is the price of gold (dollars per ounce),C is the most recent one-month report of the consumer price index of inflation (in percent),X is an index of the exchange rate of the U.S.dollar compared to seven other currencies,and S is the market price of an ounce of silver (dollars per ounce). (a)Recently,the price of gold has been $380 per ounce,inflation was measured at 0.2% for the month,the dollar has been trading at 99.7 on the foreign exchange index,and silver has been steady at $9.50 per ounce.What is the expected quantity of gold traded per week?

The equation Q = a + bt represents:

Which of the following is the best definition of a controlled market study?

Fred Smith of the Dodge City Bank has received several loan applications from local small businesses.The applications are supported by various documentations,including the business plans of the firms.Each applicant has submitted forecasts of sales and profits for his or her business.Smith must decide which (if any)loans to approve.Because the ability of the firms to pay off the loans depends on the accuracy of the forecasts,he is especially concerned.He has called on you,his newly hired assistant,to help determine the reliability of the forecasts.What do you tell him about these forecasts and their accuracy to help him make his decision?

Sales at a store are currently $450,000 per year.If sales are predicted to increase by 5% per year,forecast sales for each of the next 4 years.