Let Yt 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 file P16_50.xlsx.  a. Use...

Let Yt 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 file P16_50.xlsx.


a. Use regression to fit the following model to these data: Y_t
= a+ b₁P_t
+ b₂Y_t-1. This says that current sales are related to current price and sales in the previous month. (Hint: You won’t be able to use the first month’s data because there is no value for the previous month’s sales.)


b. If the price of a portrait during month 21 is $10, what would you predict for sales in month 21?