Consider the regression model Yi = b0 + b1Xi + ui from Chapt

Question and Solution

Consider the regression model Yi = b0 + b1Xi + ui from Chapter 4 and assume that the least squares assumptions in Key Co

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Consider the regression model Yi = b0 + b1Xi + ui from Chapter 4 and assume that the least squares assumptions in Key Concept 4.3 hold. a. Write the model in the matrix form given in Equations (18.2) and (18.4). b. Show that Assumptions #1 through #4 in Key Concept 18.1 are satisfied. c. Use the general formula for Bn in Equation (18.11) to derive the expressions for bn 0 and bn 1 given in Key Concept 4.2. d. Show that the (1, 1) element of ?Bn in Equation (18.13) is equal to the expression for s2 bn 0 given in Key Concept 4.4.

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