A chain of photography and electronics stores created a Web site to promote its photography lessons. The number of weekly visitors grew steadily, at a rate of about 300 new visitors each week. This timeplot shows the counts of unique visitors over the last 33 weeks.
To describe the growth, an analyst used a linear time trend and estimated the equation to be
ŷt = 666 + 294 t
with t = 1 denoting the first week, t = 2 the second, and so forth. The company hired a summer employee who had taken some statistics courses, and she suggested using a first-order auto regression [i.e., an AR(1) Model] instead of this time trend.
(a) What do you think the intercept and slope of the AR(1) equation are going to be?
(b) Do you think it’s a good idea to use an auto regression in place of the linear time trend in this situation?

  • CreatedJuly 14, 2015
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