23-64) Let Yt be the sales during month t (in thousands of dollars) for a photography studio, and let Pt be the price charged for portraits during month t. Use regression to fit the following model to these data:
Yt = a + b1Yt−1 + b2Pt + et
This equation indicates that last month’s sales and the current month’s price are explanatory variables. The last term, et, is an error term.
If the price of a portrait during month 21 is $10, what would you predict for sales in month 21?Does there appear to be a problem with autocorrelation of the residual? Explain your answer.
