Consider the following cost function where C denotes cost and Q denotes output. Assume that vare1t s2Q1t. We use a subscript t because the

Consider the following cost function where C denotes cost and Q denotes output.

Assume that varðe1tÞ ¼ s2Q1t. We use a subscript t because the observations are time-series data. They are stored in the file cloth.dat.

C1t ¼ b1 þ b2Q1t þ b3Q2 1t þ b4Q3 1t þ e1t

(a) Find generalized least squares estimates of b1, b2, b3, and b4.

(b) Test the hypothesis b1 ¼ b4 ¼ 0.