Question

(Academic Performance Regression) Consider the following model in which course grade is a function of hours studied

score = β0 + β1study + u

1. (a) Suppose you get a random sample from the population that consists of {scorei,studyi} for i = 1, 2, . . . , n. Also, you confirmed that study has variation in this sample. What is an additional assumption needed for OLS to be unbiased?

2. (b) Using OLS you obtain s?core = 50 + 10study, n = 100, R2 = 0.20. From this result, can you claim that β1 = 10? Explain. (Hint: think sample vs. population).

3. (c) The jth observation takes on the values scorej = 75 and studyj = 3. Based on the estimated result in (b), calculate the residual for this observation.

Answer 1