Question

2. Find the least squares estimators of the follow models (10 marks per part):
(a) yi = β0 + β1xi + ui

(b) Our research assistant mistakenly multiplies all the values of the dependent variable by 2, and all the values of our independent variable by 5, how would this influence our estimators? I.E solve the least squares estimator for the following model:
˜ yi = γ0 + γ1˜ xi + ϵi Where: ˜ yi = 2yi and ˜ xi = 5xi

Answer 1