Variables


"Variables" refers to concepts that firms and organizations in general are
interested in "explain" and forecast.

In regression analysis there is a clear distinction between:

1. the "dependent" variable, and
2. "independent" variables



Dependent variable

The dependent variable is the variable to forecast or explain.
For instance: sales, inventories, interest rates, and inflation rate.



Independent variables

Independent variables refer to variables that, it is believed by the analyst
(manager, statistician, or business person in general), affect and somehow
determine and explain the dependent variable.
For instance, the price of a product, the amount of dollars spent on
advertising, the level of income, and the price of substitute products, are
(independent) variables that could explain the behavior of sales of a product
(like cereal, tooth paste, or automobiles).