Suppose you want to study the behavior of sales of automobiles over a number of years and someone
suggests you to try the following models:
yt= B0 + B1 t
yt= à0 + à1 t + à2 t2
Where yt = sales at time t and t = time. The first model postulates that sales is a linear function of time,
whereas the second model states that it is a quadratic function of time.
(a) Discuss the properties of these two models.
(b) How would you decide which model is appropriate between these two models?
(c) In what situation will the Quadric Model be useful. 

(a) Properties of the Two Models:

Linear Model (yt = B0 + B1 t): The linear model assumes that the relationship between sales (yt) and time (t) is a straight-line relationship. In this model:

• Intercept (B0): Represents the initial value of sales at time t = 0. It indicates the baseline sales value when time is zero.
• Slope (B1): Represents the rate of change of sales with respect to time. It indicates how much sales change for each unit change in time. A positive slope implies sales are increasing over time, while a negative slope implies sales are decreasing.

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