Happyhols sells packaged holidays and has observed the following pattern of sales over the last 8 years in terms of the relationship with average income in the market:

20102011201220132014201520162017

Income ($000)2827 29 3130 33 34 34

Sales (units)380430410420450440480500

a) Is it appropriate to use a lagged relationship in the above situation? Explain your reasoning.

b) Estimate an appropriate relationship.

c) Estimate sales in 2018 stating any relevant assumptions.

d) Estimate the income elasticity of demand for the period as a whole.

e)How much of the variation in sales is explained by the relationship with income?