Econometrics For Business Decision-Making


         Managers nowadays face myriad decision problems that will arise in any firm or organization in its quest to achieve some goals or objectives during restraints. The goal varies from one organization to the other, yet the process of undertaking decisions is similar.

           Forecasting the firm’s demand for the goods and services it offers to the market plays an integral role in the optimum allocation of its scarce resources. So vital decisions about the goods to produce depending on the manager’s or the entrepreneur’s estimate of future demand. If the production is more than the actual demand there will be a surplus of inventory that will be tantamount to stocked capital. However, if the amount of inventory is lesser than the demand, then the firm will incur opportunity loss. Hence for optimal decision, it is of great importance that the entrepreneur will apply appropriate forecasting techniques.

    Optimal business decision-making requires the quantitative measurement of economic relationships that exists in the environment. Econometrics is the application of statistical tools and mathematical models to real-world data to measure models advanced by economic theory for forecasting. It is a collection of various techniques in statistics for estimating the relationship between and among variables. Hence, it can also be used to develop economic theory.

        Moreover, econometrics is a combination of theory, statistical analysis, and mathematical model building to elucidate economic relationships. Econometric models have variations in their extent of sophistication from the simple to the more complex ones.

Forecasting models based on econometric methods comprise several significant meaningful benefits. The most important beneist is that they pinpoint independent variables like price or advertising expenditures in a demand model that the organizational leaders may be able to manipulate or control

    These methods utilized in making optimal decisions depend on statistical inferences to quantify and analyze economic theories by leveraging tools such as frequency distributions,  probability, and probability distributions, statistical inference, correlation analysis, simple and multiple regression analysis, simultaneous equations models, and time series methods. However, regression and correlation analysis are the most common econometric technique in quantifying demand relationships.


The following is the course content:

Module 1: Comparative Statics Analysis: Competitive Market Model

Module 2: Demand Estimation by Regression Analysis

Module 3: Simple Regression Analysis

Module 4: Multiple Regression Analysis

Module 5: Econometric Model using Single-Equation

Module 6: Multiple Equation Models

Module 7: Forecasting with Input-Output Tables

What will you learn

  • Statistics 003 - Statistics for Social Sciences


  • 7 Lessons
  • 01:33:47.000000 Hours

About instructor

Name : Dr. Philip Joel Macugay
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Name : Engr. Fondador Mendoza
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