A furniture maker is interested in forecasting sales, and believes that there is a relationship between quarterly sales ("Y") and the number of housing starts in the same quarter one year earlier ("X₁").Also, sales of furniture are usually higher in the spring and summer than the fall and winter quarters.The maker creates a dummy variable X₂ with a value corresponding to each quarter as follows:

X₂ = 1 if a spring or summer quarter; and = 0 if a fall or winter quarter

The maker collects up 40 observations on sales (in 000's) and housing starts and derives the following regression equation:

Y=125.1 + .46X₁ + 25.7X₂

(10.2)(6.9)(1.7)

(The t-statistic from the regression analysis is shown in parentheses below each coefficient.)

i)Interpret for someone unfamiliar with regression the meaning of the coefficient of X₂, 25.7.

ii)Is there a seasonal effect, based on this evidence?Why or why not?