c) Explain what are internal and external validity.

d) Suppose the population model is Yi = f(Xi) + ui where Yi = represents grade in an econometrics course (measured from 0 to 100) for individual i and Xi a positive measure of effort of individual i. Specify (write down) a nonlinear model that you can estimate using OLS. Explain your choice of model.

Part IV: Specification (20 points) a) Suppose your population model includes a regressor X among several other regres- sors. Explain the difference in the interpretation of the population coefficient Bk when Xx is a continuous variable and when X. is a binary {0, 1} variable. = O does not hold when control variables are in- b) Explain why E[u:|X1,2, ..., XK,i] cluded among the regressors. Part IV: Specification (20 points) a) Suppose your population model includes a regressor X among several other regres- sors. Explain the difference in the interpretation of the population coefficient Bk when Xx is a continuous variable and when X. is a binary {0, 1} variable. = O does not hold when control variables are in- b) Explain why E[u:|X1,2, ..., XK,i] cluded among the regressors