1. A researcher decided to create set of Y-intercept dummy variables to reflect the impact of seasonality on sales. If the researcher wishes to analyze the impact of the four quarters of the year (January to March, April to June, July to September, and October to December), how many dummy variables should be created and included in the multiple regression model?


 


 

1. Continuing from problem 7, a researcher has decided to create quarterly (January to March, April to June, July to September, and October to December) dummy variables to reflect the impact of seasonality on sales.
   1. (3 pts) The researcher has asked you to complete the data table below. (Hint: See slide #51 from Slide Set 16 Multiple Linear Regression; the dummy variables you are creating are looking at differences in the intercept term of each.)


 

Year	Month	Units sold	Qtr 1	Qtr 2	Qtr 3	Qtr 4
2018	Jan	15
2018	Feb	30
2018	Mar	25
2018	Apr	15
2018	May	13
2018	Jun	14
2018	Jul	12
2018	Aug	22
2018	Sep	20
2018	Oct	14
2018	Nov	35
2018	Dec	40
2019	Jan	18
2019	Feb	36
2019	Mar	28
2019	Apr	30
2019	May	16
2019	Jun	17
2019	Jul	14
2019	Aug	26
2019	Sep	24
2019	Oct	17
2019	Nov	42
2019	Dec	48


 

1. (2 pts) To avoid the issue of perfect multicollinearity, how many of the above quarterly "dummy" variables will you include in your regression model? In addition, how would you report the results of your model regarding the included dummy variables? It might help if you select a quarter as a "base" and explain your answer from there.


 


 

1. (4 pts) Continuing from question #7, a second researcher believes that each quarter (January to March, April to June, July to September, and October to December) has a different slope, therefore she decides to create quarterly slope dummy variables (rather than intercept dummy variables). She has asked you to complete the data table below. (Hint: See slide #68 audio box from Slide Set 16 Multiple Linear Regression; the dummy variables you are creating are looking at differences in the slope term of each.)


 

Year	Month	Units sold	Qtr 1	Qtr 2	Qtr 3	Qtr 4
2018	Jan	15
2018	Feb	30
2018	Mar	25
2018	Apr	15
2018	May	13
2018	Jun	14
2018	Jul	12
2018	Aug	22
2018	Sep	20
2018	Oct	14
2018	Nov	35
2018	Dec	40
2019	Jan	18
2019	Feb	36
2019	Mar	28
2019	Apr	30
2019	May	16
2019	Jun	17
2019	Jul	14
2019	Aug	26
2019	Sep	24
2019	Oct	17
2019	Nov	42
2019	Dec	48