A model with a dummy dependent variable (also known as a qualitative dependent variable) is one in which the dependent variable, as influenced by the explanatory variables, is qualitative in nature. Some decisions regarding 'how much' of an act must be performed involve a prior decision making on whether to perform the act or not. For example, the amount of output to produce, the cost to be incurred, etc. involve prior decisions on whether to produce or not, whether to spend or not, etc. Such "prior decisions" become dependent dummies in the regression model.