Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter4A: Problems In Applying The Linear Regression Model
Section: Chapter Questions
Problem 5E
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Question
14. Estimating the variance of the error term
Suppose you are interested in looking at the determinants of a worker's wage, and use the following econometric model to do so:
wage=β0+β1 educ+u wage=β0+β1 educ+u
where
educ = years of education | |
u = error term |
You take a sample of 120 individuals and collect data on each person's wage and level of educational attainment.
An unbiased, observable estimator of the variance of the error term (σ2?2) is σˆ2?^2
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