Question 1 (a) (1 point) What is wrong with this formulation of the regression model: Y...
Question 1
(a) (1 point) What is wrong with this formulation of the regression model: Y = β0 +β1X? How would you express it instead?
(b) (1 point) What assumptions are made about the distribution of the explanatory variable in the simple linear regression model?
Homework Answers
(a) In the given model, there is no error part. There will be problem in analysis if there is no error term.
y = β0 + β1 + e
Here y is dependent variable whereas x is independent or explanatory variable.
(b) The error e is independent and identically distributed random variable with mean zero and constant variance σ2 (homoscedastic). X is supposed to possess linear relationship. The variable y is normally distributed for any x.
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Question 1
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