Thompson Airlines has determined that 5% of the total number of U.S. domestic airline passengers fly on
Question:
a. Develop a time series regression model, using time as the independent variable and the number of passengers as the dependent variable. Fit this model.
b. Is the assumption of independent errors for this model viable?
c. Fit the model in part a with the logarithms of the number of passengers as the dependent variable.
d. Repeat part a with the time represented by an exponential trend.
e. Which of the models in parts c and d do you prefer? Why?
f. Do the errors for either of the models in parts c and d appear to be independent? If not, what problem(s) might arise when using one (or both) of these fitted models for forecasting?
g. Using your preferred model, forecast the number of Thompson Airlines passengers for 2007.
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