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c) How can the firm determine the most suitable forecasting method to
use?
Discussion Question 7:
a) Which type of smoothing technique is generally better?
b) How do we determine which of two smoothing techniques is better?
c) How can we forecast the values of a time series that contains a secular
trend as well as strong seasonal and random variations?
Discussion Question 15: Explain why it is still useful to pursue
forecasting even though it is often off the market by wide margins
Problem 7: The following table represents data on three leading
indicators for a three-month period. Construct the composite index (with
each indicator assigned equal weight) and the diffusion index.
Appendix Problem 1: The following table reports the Consumer Price
Index for the Los Angeles area on a monthly basis from January 1998 to
December 2000 (base year= 1982-1984). Eliminating the data for 2000,
use Excel to forecast the index for all of 2000 using a three- and six-
month average. Which provides a better forecast for 2000 using the data
provided?
Appendix Problem 3: Forecast the data for 2000 again in Problem 1 with
exponential smoothing with w=0.3 and w=0.7. Is this a better forecast
than the moving average?
Salvatore’s Chapter 7:
Discussion Questions: 3, 11, and 12.
Problems: 4, 12, and 13.
Discussion Question 3:
a) How is the law of diminishing returns reflected in the shape of the
total product curve?
b) What is the relationship between diminishing returns and the stages of
production?
Discussion Question 11: Minimum wage legislation requires most firms
to pay workers no less than the legistiated minimum wage per hour.
Using marginal productivity theory, explain how a change in the
minimum wage affects the employment of unskilled labor