Primary restriction of making demand, Financial Accounting

Q. Primary restriction of making demand?

The primary restriction of making demand forecasts lies in the fact that they are forecasts and hence their reliability is unknown. Most predicts are based upon a mix of historic information and expectations in relation to relevant influential variables. For instance the exchange rate predicts where the highest probability is attached to a rate of 1·54 Euro/£ is probable to be based on the statistical pattern of historic exchange rates including the standard deviation such that 1·54 Euro/£ constitutes the most frequently observed rate. This doesn't but necessarily means that the rate will be similar in the future - history doesn't always repeat itself.

Another restriction relates to the nature of the data being forecast. Weather forecasts are notoriously undependable because nature is such an uncontrollable force. Even if the UK climate has been hot on average for the past five years doesn't imply that this will be the case in the future. The factors which utter the weather are uncontrollable and consequently to a large degree unpredictable.

The forecast as well runs into problems because it seeks to link two unrelated variables. The state of the weather is completely independent of the exchange rate and vice versa as well as they can only be linked in the way suggested by the table if the range of alternative observations is restricted. This is eventually a distortion of a reality which is far more complex.

Posted Date: 7/11/2013 5:52:35 AM | Location : United States

Related Discussions:- Primary restriction of making demand, Assignment Help, Ask Question on Primary restriction of making demand, Get Answer, Expert's Help, Primary restriction of making demand Discussions

Write discussion on Primary restriction of making demand
Your posts are moderated
Related Questions
The real risk-free rate is 2%. Inflation is expected to be 2% this year and 5% during the next 2 years. Suppose that the maturity risk premium is zero. What is the yield on 2-ye

XYZ Municipality purifies water before it enters the reticulation network. There are presently 3 purification processes available to the municipality. These processes sre referred

Ademption If property which has been specifically bequeathed does not belong to the testator at the time of his death, or has been converted into property of a different kind,

Select two of the following firms: Dole Foods, Campbell Soup, Hershey and Dr. Pepper Snapple. Use the 10-K, annual report and other information to answer the following questions.

Tampa Foundry began operations during the present year, manufacturing several products for industrial use. One such product is light-gauge aluminum, which the company sells for $36

In January 2013, Mitzu Co. pays $2,600,000 for a tract of land with two buildings on it. It plans to demolish Building I and build a new store in its place. Building 2 will be a co

ABC Analysis: ABC that is Always Better Control analysis is an application of the principle of 'Management by Exception' to the field of inventory control. If we seem at the in

Ely purchased a patent (with a remaining legal life of ten years) from Backo on January 1, 2010 for $300,000. Ely expected to use the patent for five years. The carrying value on B

What are main factors that Nor'easters should take into account in establishing a pricing policy? The minor revenue generators of Nor'easters include corporate sponsorships and

Classifying expenses by nature Under this format, expenses are not classified by their nature i.e. referred to specifically according to their type and the major categories of ex