Let Y t be the sales during month t (in thousands of dollars) for a...

Let Y_t be the sales during month t (in thousands of dollars) for a photography studio, and let P_t be the price charged for portraits during month t. The data are in the attachment below. Use regression to fit the following model to these data: Y_t = a + b1Y_t1 + b2P_t + e_t

This equation indicates that last month's sales and the current month's price are explanatory variables. The last term, e_t, is an error term. a. If the price of a portrait during month 21 is $10, what would you predict for sales in month 21? b. Does there appear to be a problem with autocorrelation of the residuals?

Month Sales Price 1 $400,000 $15 2 $1,042,000 $12 3 $1,129,000 $24 4 $1,110,000 $18 5 $1,336,000 $18 6 $1,363,000 $30 7 $1,177,000 $27 8 $603,000 $24 9 $582,000 $36 10 $697,000 $27 11 $586,000 $24 12 $673,000 $27 13 $546,000 $30 14 $334,000 $33 15 $27,000 $24 16 $76,000 $27 17 $298,000 $30 18 $746,000 $18 19 $962,000 $21 20 $907,000 $24