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Time Series & Trend · Question 53 of 68

Question 53

MediumOriginal question

A straight-line trend y=a+bxy = a + bx is fitted by least squares to the sales 10, 12, 15, 17 and 21 for 2021 to 2025, with xx measured in years from 2023. What is aa?

Options for question 53

Show the answer and explanation
CorrectNot quiteAnswer C

Correct answer: C

Explanation

  1. With xx running −2,−1,0,1,2-2, -1, 0, 1, 2, ∑x=0\sum x = 0, and the first normal equation ∑y=na+b∑x\sum y = na + b\sum x becomes ∑y=na\sum y = na.

  2. a=∑yn=755=15a = \frac{\sum y}{n} = \frac{75}{5} = 15, the mean of the sales.

Worth noting

75 is ∑y\sum y before dividing by the 5 years.

Concept
The intercept when the years are centred
Typical time
90 s
Your time
—
The rule this testsA straight-line trend by least squares
Practise this chapter →

Ten questions from Time Series & Trend, at your own pace.

Practise this chapter →

Ten questions from Time Series & Trend, at your own pace.