B. Consider the simple linear regression model

= + + = 1,2, ... , 501

and the dataY

Y. X.

8. 4

14. 6

6. 2

18. 10

34. 18

Calculate the following quantities using the equations indicated and a basic calculator. You may NOT use STATA for this exercise and you MUST show your detailed working, step-by-step, in each case.

i) The OLS estimates0and1[equations (2.4) and (2.5)]

ii)[one of the equations in Footnote 3 on p. 38] iii)2[equation (2.14)]

2

iv)[equation (2.15)]

And

v) Explain how your answers to parts i) through iv) would change, if at all, if each observation on Y and X were to be halved (divided by 2).

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