Explanation

In this regression model with dummy variables:

• The model includes dummy variables for Q2, Q3, and Q4
• Q1 is the reference category (omitted category)
• When all dummy variables = 0 (D₂,t = 0, D₃,t = 0, D₄,t = 0), this represents the first quarter
• Therefore, the intercept β₀ represents the average value of sales for Q1

Mathematical breakdown:

• For Q1: SALES = β₀ + β₂(0) + β₃(0) + β₄(0) = β₀
• For Q2: SALES = β₀ + β₂(1) + β₃(0) + β₄(0) = β₀ + β₂
• For Q3: SALES = β₀ + β₂(0) + β₃(1) + β₄(0) = β₀ + β₃
• For Q4: SALES = β₀ + β₂(0) + β₃(0) + β₄(1) = β₀ + β₄

Thus, β₀ represents the baseline average sales for the first quarter, and the coefficients β₂, β₃, β₄ represent the difference in average sales between each quarter and the first quarter.