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In the linear regression model ? = ?0 + ?1? + ?, let y be the...

In the linear regression model ? = ?0 + ?1? + ?, let y be the selling price of a house in dollars and x be its living area in square feet. Define a new variable ? ∗ = ? − 1000 (that is, ? ∗ is the square feet in excess of 1000), and estimate the model ? = ?0 ∗ + ?1 ∗? ∗ + ?.

a] Show the relationship between the OLS estimators ?1̂∗ and ?̂1 .

b] Show the relationship between the OLS estimators ?0̂∗ and ?̂0 .

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Answer #1

Original model :-

new model :- where

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