# In a regression of average wages (W) on the number of employees (N) for a random sample

## Question:

a. How would you interpret the two regressions?

b. What is the author assuming in going from Eq. (1) to (2)? Was he worried about heteroscedasticity?

c. Can you relate the slopes and the intercepts of the two models?

d. Can you compare the R2 values of the two models? Why or why not?

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## Step by Step Answer:

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