Question: 18.4 Consider the regression model Yi = b0 + b1Xi + ui from Chapter 4 and assume that the least squares assumptions in Key Concept

18.4 Consider the regression model Yi = b0 + b1Xi + ui from Chapter 4 and assume that the least squares assumptions in Key Concept 4.3 hold.

a. Write the model in the matrix form given in Equations (18.2) and (18.4).

b. Show that Assumptions #1 through #4 in Key Concept 18.1 are satisfied.

c. Use the general formula for B n in Equation (18.11) to derive the expressions for b n

0 and b n

1 given in Key Concept 4.2.

d. Show that the (1, 1) element of B n in Equation (18.13) is equal to the expression for s 2

b n

0 given in Key Concept 4.4.

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