Given the assumptions in column 1 of the table, show that the assumptions in column 2 are
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Given the assumptions in column 1 of the table, show that the assumptions in column 2 are equivalent to them.
Assumptions of the Classical Model
(1)…………………………….................... (2)
E(ui\Xi) ………………………..................E (Yi\Xi) = β2 + β2X
Cov (ui, uj) = 0 i ≠ j………….............. Cov (Yi, Yj) = 0 i ≠ j
Var (ui\Xi) = σ2 ……………................. Var (Yi\Xi) = σ2
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