Question

Explain the estimation methods of models with dummy dependent variables.

Answer 1

Dummy variable is also known as qualitative variable as well as binary variable. Qualitative variable is a variable where the quality is checked(present or not) and measuring can't be done over here hence it is qualitative and not quantitative. In order to add some quality to qualitative variable model we generally use dummy variables.The estimation methods of model are mainly used to estimate various factors such as cost model, required resources etc.The cost of a product is estimated in the cost estimation models by using mathematical algorithms. Which means the estimation of cost is done with the help of mathematical algorithms. Estimations are of different types such as detailed estimation, rough estimation and quantity estimation. The cost estimations are of three types and they are order of magnitude estimate, budget estimate and definitive estimate.