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{"ops":[{"insert":"Suppose you express the Cobb\u2013Douglas model given in Eq. (7.9.1) as follows:"},{"insert":"\n"},{"insert":""},{"insert":"\n"},{"insert":"Yi = \u03b21X\u03b22"},{"insert":"\n"},{"insert":""},{"insert":"\n"},{"insert":"2i X\u03b23"},{"insert":"\n"},{"insert":""},{"insert":"\n"},{"insert":"3i ui"},{"insert":"\n"},{"insert":""},{"insert":"\n"},{"insert":"If you take the log-transform of this model, you will have ln ui as the disturbance"},{"insert":"\n"},{"insert":""},{"insert":"\n"},{"insert":"term on the right-hand side."},{"insert":"\n"},{"insert":""},{"insert":"\n"},{"insert":"a. What probabilistic assumptions do you have to make about ln ui to be able to"},{"insert":"\n"},{"insert":""},{"insert":"\n"},{"insert":"apply the classical normal linear regression model (CNLRM)? How would you"},{"insert":"\n"},{"insert":""},{"insert":"\n"},{"insert":"test this with the data given in Table 7.3?"},{"insert":"\n"},{"insert":""},{"insert":"\n"},{"insert":"b. Do the same assumptions apply to ui ? Why or why not?"},{"insert":"\n"}]}

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