8 Let Yt  sales during month t (in thousands of dollars)

for a photography studio (SALES in Table 31) and Pt 

price charged for portraits during month t (PRICE). Use a computer to fit the following model to the data in Table 31

(file Portrait.xls):

Yt  b0  b1Yt1  b2Pt  t Thus, last month’s sales and the current month’s price are independent variables.

a If the price of a portrait during month 21 is $10, what would we predict for month 21’s sales?

b Does there appear to be a problem with autocorrelation, heteroscedasticity, or multicollinearity?