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Let Y(sub-1) be the sales during month t (in thousands of dollars) for a photograph studio, and let P(sub-t) be the price charged for the portraits during month t. The data are included in the file provided below.
Use regression to fit the following model to these data:
The equation indicates that last month's sales and the current month's price are explanatory variables. The last term, e(sub-1), is an error term.a. If the price of a portrait during month 21 is $10, predict the studio's sales in month 21.b. Does there appear to be a problem with autocorrelation of the residuals?
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