Answer to Question #201189 in Economics of Enterprise for Biniyam yirgalem

Question

YI = β1X I 1 + β 2X I 2 + UI WhereUi ∼ NID (0, σu 2 ) , YI is observable random variable and theXij ' s , j =1, 2 are observable non-random (non-stochastic) variables. The data that follows is based on a sample of size N = 120 and gives the sums of squares and cross-products of the indicated variables Y X1 X2 Y 39 6 2 X1 6 4 0 X2 2 0 4 a). Compute the best linear unbiased estimates of the coefficients. (2 points) b). Give a 95% confidence interval for β1 . (2 points) Test the hypothesis H 0 : β1 + β2 = 1 against the alternative H 0 : β1 + β2 ≠ 1 at the 95% confidence level. 

Answer 1

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