Question: 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

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 file P14_39.xlsx.

a. Use regression to fit the following model to these data: Y_t = a + b₁ P_t + b₂Y_t–1. This says that current sales are related to current price and sales in the previous month.

b. If the price of a portrait during month 21 is $30, what would you predict for sales in month 21?

Step by Step Solution

★★★★★

3.43 Rating (175 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

Month Sales SalesLag1 Price 1 400000 15 2 1042000 400000 12 3 1129000 1042000 24 4 1110000 1129000 1... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (2 attachments)

1497_60b7412683849_696759.pdf

180 KBs PDF File

1497_60b7412683849_696759.docx

120 KBs Word File

Students Have Also Explored These Related Practical Management Science Questions!

Currently, the management at RR Ltd are in preliminary decisions on a horizontal acquisition of Sporty PLC. Sporty PLC has an established mens fashion brand; however, it is believed to be not...

a. Assume that, on average, the brothers expect annual sales of 18,000 items at an average price of $100 per item. (use a 365 day year.) (1) What is the firm's expected days sales outstanding (DSO)?...

Rich Jackson, a recent finance graduate, is planning to go into the wholesale building supply business with his brother, Jim, who majored in building construction. The firm would sell primarily to...

The Schmidt Corporation estimates that its demand function is Q = 400 - 3P + 4I + 0.6A where Q is the quantity demanded per month, P is the product's price (in dollars), I is per capita disposable...

Sales $400,000 $1,042,000 $1,129,000 $1,110,000 $1,336,000 $1,363,000 $1,177,000 $603,000 $582,000 $697,000 $586,000 $673,000 $546,000 $334,000 $27,000 $76,000 $298,000 $746,000 $962,000 $907,000...

Let Yt be the sales during month t (in thousands of dollars) for a photography studio, and let Pt be the price charged for portraits during month t. The data are in the file S11_45.xlsx. Use...

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...

Let Yt be the sales during month t (in thousands of dollars) for a photography studio, and let Pt be the price charged for portraits during month t . The data are in the file Week 4 Assignment...

Let Yt be the sales during month t (in thousands of dollars) for a photography studio, and let Pt be the price charged for portraits during month t. The data are in the file Week 4 Assignment Chapter...

(S/B: 12/64) Let Yt be the sales during month t (in thousands of dollars) for a photography studio, and let Pt be the price charged for portraits during month t. The data are in the file Week 4...

1. Suppose a golf course manager is considering using the two-part pricing to charge identical consumers. Each consumer needs to become a member first. There is also a unit price for using the golf...

An annuity purchased for $50,000 sustained quarterly withdrawals of $1941.01 for 7 years and 9 months. What nominal rate of return and effective rate of return were the retained funds earning?

Discontinue a Segment amount is zero, enter " 0 " . If required, use a minus sign to indicate a loss. Differential Analysis Continue Product Tango ( Alt . 1 ) or Discontinue Product Tango ( Alt . 2 )...

Smith paints allocates overhead based on machine hours. Selected data for the most recent year follow. Estimated MOH cost $250000, Actual MOH cost $230000, estimated machine hr $20000, actual machine...

Calculate the value of resistance Calculate the value of resistance that would absorb maximum power from the following circuit, when connected across terminals a and b? 2vab 20 o a 900 mA 100 0.1ua...

Obtain fourier series representation of the function Q2. Obtain Fourier series representation of the function -T

Adama Company reported a net loss of $6,000 for the year ended December 31, 2014. During the year, accounts receivable increased $15,000, merchandise inventory decreased $12,000, accounts payable...

On December 31, 2012, Barker Inc. provided consulting service to Carr Company at an agreed price of $151,121. Barker accepted $60,000 down and agreed to accept the balance in four equal installments...

Compute and interpret Spearmans rho, a measure of association for continuous ordinal-level variables.

Harry and Mary Prodigious are married filing jointly and have 12 dependent children. Six of the children are under age 17. With the large number of children, they live in a very austere manner....

Allen, an unmarried taxpayer filing single, has no dependents and reports the following items on his 2017 federal income tax return: Adjusted gross income $82,450 Taxable income ........47,950...

Amelia has wages of $45,000 and net income from a small unincorporated business of $70,000 for 2017. a. What is the amount of Amelias self-employment (SE) tax and deduction for AGI for her SE tax? b....

A game of chance offers the following odds and payoffs. Each play of the game costs S200, so the net profit per play is the payoff less S200. What is the expected cash payoff? (Do not round...

Greenberg Corp. is considering opening a subsidiary to expand its operations. To evaluate the proposal, the company needs to calculate its cost of capital. You've collected the following information:...

A company is projected to generate free cash flows of $20 million per year for the next three years, followed by a stable growth of 2% per year in perpetuity. The company's cost of capital is 10%. It...