Extrapolation Lecture Notes

Flashcards covering the definition, users, advantages, and disadvantages of extrapolation for forecasting, based on the provided lecture notes.

What is extrapolation in the context of business forecasting?

It is a method where businesses identify past trends to forecast what will happen in the future.

How does the Government use extrapolation?

The Government uses extrapolation when estimating the number of teachers or nurses needed.

Name one advantage of using extrapolation for forecasting.

It is a simple method of forecasting, requires not much data, is quick and cheap, or can be applied to a wide range of data types.

How can extrapolation be useful for decision-making?

It can be useful for decision-making as it predicts future trends and can identify potential problems before they occur.

What makes extrapolation unreliable regarding historical data?

Extrapolation is unreliable if there are significant fluctuations in historical data.

What is a major assumption made by extrapolation that might not hold true?

It assumes past trends will continue into the future, which is unlikely in many competitive business environments.

What kind of factors does extrapolation ignore?

It ignores qualitative factors such as changes in tastes and fashions.

What affects the accuracy of extrapolation?

It is only as accurate as the data it is based on, meaning it may not be accurate if the data is incomplete, inconsistent, or inaccurate.