Question: 1 Consider a bivariate regression model: Yi Bo + 11i + Ei = CON6004WI A (a) Explain first how OLS works in words, and

1 Consider a bivariate regression model: Yi Bo + 11i + Ei

1 Consider a bivariate regression model: Yi Bo + 11i + Ei = CON6004WI A (a) Explain first how OLS works in words, and show this diagram- matically. (b) When running a regression y = Bo + B21i + Ci, a colleague recommends that you use robust standard errors. With the help of a diagram, explain the issue that robust standard errors help to prevent. Does this issue affect the resulting point estimates of Bo and B? [10] [7] [3]

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