Question: Consider the linear regression: Yi = Bo + B1.I;+u (1) Suppose that our sample consists of 100 individuals. Unfortunately, we have missing observations on l;

 Consider the linear regression: Yi = Bo + B1.I;+u (1) Suppose

Consider the linear regression: Yi = Bo + B1.I;+u (1) Suppose that our sample consists of 100 individuals. Unfortunately, we have missing observations on l; of 10 individuals. Researcher, first estimates the equation by dropping the 10 missing observations from the sample. Then, he defines a dummy variable, Di, where: if is missing D = 0 if Otherwise and estimates the following equation: Yi = 00 +41 21 +02 D; +; (2) To his surprise, he finds = n Prove that what he did was true. If it is not true, show where he made a mistake. (Hint: Decompose SSR of the second model for those who have It observation and those who do not.)

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