The previous trend line has predicted 18,500 for two years ago,and 19,700 for last year What was the mean absolute deviation for these forecasts?
A)100
B)200
C)400
D)500
E)800

Question

The previous trend line has predicted 18,500 for two years ago,and 19,700 for last year What was the mean absolute deviation for these forecasts?
A)100 
B)200 
C)400 
D)500 
E)800

Quizplus · Accepted Answer

Mean absolute deviation (MAD) measures how far the data points are from the predicted value. To calculate MAD, you take the absolute value of the difference between each actual value and the predicted value, sum them up, and divide by the total number of data points. 
For two years ago, the predicted value was 18,500 and we don't know the actual value, so we can't calculate MAD for that year. For last year, the predicted value was 19,700, let's say the actual value was 20,000, then the MAD would be:
|20,000 - 19,700| = 300
So the MAD for last year was 300. Since we only have one data point to calculate MAD, that's the only answer choice we can pick.

The Previous Trend Line Has Predicted 18,500 for Two Years