When estimating change in sales for a market series, change in sales is regressed against change in ________.
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A. B. C. D.B
Regressing change in sales with change in GNP basically to find a relationship between GNP and sales, so that GNP growth rate can be used to estimate future sales changes.
In order to estimate the change in sales for a market series, the question asks us to determine what variable should be regressed against the change in sales. Regression analysis is a statistical technique used to identify and quantify the relationship between two or more variables.
The answer options are as follows:
A. Earnings: This refers to the profits earned by a company. While earnings may have an impact on sales, the question specifically asks about the change in sales, not the change in earnings. Therefore, it is not the correct variable to regress against the change in sales.
B. Nominal GNP: Nominal Gross National Product (GNP) represents the total value of goods and services produced by a country's residents, including income from abroad, without adjusting for inflation. Although GNP can provide an indication of the overall economic activity in a country, it is not necessarily directly related to the change in sales for a specific market series. Therefore, it is not the correct variable to regress against the change in sales.
C. None of these answers: This option suggests that none of the provided answers are correct. It implies that there is another variable or set of variables that should be regressed against the change in sales. However, without further information, it is difficult to determine what those variables might be. As a result, this option is not the correct answer either.
D. Revenues: Revenues refer to the total amount of money generated by a company through its sales activities. Change in revenues directly reflects the change in sales, making it a suitable variable to regress against the change in sales for a market series. When conducting the regression analysis, the change in sales would be the dependent variable, while the change in revenues would be the independent variable. By analyzing the relationship between these two variables, one can estimate the impact of revenue changes on sales changes for the given market series.
Therefore, the correct answer is D. Revenues.