Arrange the steps in demand forecasting from beginning to end A. Specifying objectives B. Making choice of methods C. Determing the perspective D. Estimation and interpretation of results E. Collection of data and data adjustment Choose the correct answer from the options given below:
A, C, B, E, D
A, C, B, E, D — option 4.
| Order | Step | What it settles |
|---|---|---|
| 1 | A — Specifying the objectives | Why the forecast is being made — for a pricing decision, a capacity plan, a sales budget? The objective fixes what must be forecast, for what product, market and period |
| 2 | C — Determining the perspective | The time horizon and level — short run or long run, firm level or industry level, one product or a whole line |
| 3 | B — Choosing the method | Survey methods, expert opinion, Delphi, trend projection, barometric techniques, regression, or a controlled market experiment — the choice depends on the objective, horizon and data available |
| 4 | E — Collecting and adjusting the data | Gathering primary or secondary data and cleaning it — removing abnormal years, adjusting for price changes, seasonality and definitional breaks |
| 5 | D — Estimating and interpreting the results | Running the estimation, reading the coefficients, and stating the forecast with its margin of error |
The logic that fixes the order. Objectives come first, because everything after them depends on what the forecast is for. Interpretation must come last, because there is nothing to interpret until the estimate exists. Fixing A first and D last eliminates options 1, 2 and 3 at once, without reasoning through the middle at all.
The step most often misplaced is data collection. It is tempting to gather data first, but the method determines what data are needed — a Delphi study needs experts, a regression needs a time series of prices and incomes, a market experiment needs a test market. Collecting first and choosing afterwards wastes effort and biases the choice toward whatever happens to be available.
The main forecasting methods, for context :
| Family | Techniques |
|---|---|
| Survey and opinion | Consumer survey, sales-force opinion, expert opinion, Delphi |
| Statistical | Trend projection, moving averages, exponential smoothing, regression, barometric or leading indicators |
| Experimental | Controlled market experiments, test marketing |
Hence, the answer is A, C, B, E, D.
Similar Questions
Match the production functions List - I with the return to scale List - II.
List - I (Production function) List - II (Return to scale) (a) \( Q = 10\,K^{0.5}L^{0.4}E^{0.15}M^{0.1} \) (i) increasing (b) \( Q = 12\,K^{0.5}L^{0.5} \) (ii) constant (c) \( Q = 100\,K + 15\,L \) (iii) decreasing (d) \( Q = 40\,K^{0.3}L^{0.5} \) Code :
It costs a firm ₹ 90 per unit to produce product A, and ₹ 60 per unit to produce B individually. If the firm can produce both products together at ₹ 160 per unit of product A and B, this exhibits signs of:
Managerial economics is concerned with which combination of the following ?
(a) Investment Analysis and Decisions
(b) Production Behaviour and Cost Analysis
(c) Input Reward Analysis and Decisions
(d) Economic Environment Analysis
Code :
When P0 and P1 and Q0 and Q1 denote before and after change in the price and quantity respectively and in both the situations, total outlay remains the same, which of the following formulae give the similar value of the arc price - elasticity of demand ?
(a) \(\dfrac{Q_{0}-Q_{1}}{P_{0}-P_{1}}\times\dfrac{P_{0}+P_{1}}{Q_{0}+Q_{1}}\)
(b) \(\dfrac{Q_{0}-Q_{1}}{P_{0}-P_{1}}\times\dfrac{P_{0}}{Q_{1}}\)
(c) \(\dfrac{Q_{0}-Q_{1}}{P_{0}-P_{1}}\times\dfrac{P_{0}}{Q_{0}}\)
(d) \(\dfrac{Q_{0}-Q_{1}}{P_{0}-P_{1}}\times\dfrac{P_{1}}{Q_{1}}\)
(e) \(\dfrac{Q_{0}-Q_{1}}{P_{0}-P_{1}}\times\dfrac{P_{1}}{Q_{0}}\)
Code :
In case the producer's equilibrium shifts to a higher isoquant due to decrease in price of an input, the curve combining the successive equilibrium positions is known as :
Which one of the following statements is not correct ?
For the following two statements of Assertion (A) and Reasoning (R), indicate the correct code :
Assertion (A) : Ridge Lines in isoquant map set the limits for the positive productivities of the respective inputs used in the production process.
Reasoning (R) : Isoquants will slope positively if the use of an input is increased beyond the limit set by the ridge lines.
Code :
If a 100% scale-efficient plant has 92% technical efficiency and 88.5% allocative-efficiency, then its overall efficiency will be :
Statement (I): The elasticity of factor substitution is formally defined as the percentage change in the capital-labour ratio divided by the percentage change in the marginal rate of technical substitution.
Statement (II): \(Q = K^{0.5} L^{0.3}\) is a production function where Q = output, K = units of capital and L = units of labour. This production function shows the application of increasing returns to scale.
Codes:
Law of Diminishing Return applies when the gaps among the successive ‘multiple-level of output’ isoquants:
Important Questions from Production Function
For the following two statements of Assertion (A) and Reasoning (R) suggest the correct code:
Assertion (A): Low initial price regarded as the principal means for entering into mass market for some new products.
Reasoning (R): Firms generally enter into production of new products with excess capacity of the plant initially.
Code:
Indicate the correct code from the following types of the long run average cost curves on which the minimum average cost of production in long run can be determined:
(i) Long run average cost curve under normal production function
(ii) Long run average cost curve under linearly homogeneous production function
(iii) Planning curve
(iv) Envelope curve
Choose the correct answer from the code given below :
Which of the following is not an attribute of production function?
Which of the following is an example of non-durable goods?
What is constant along an isoquant?
