#### 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).