Question: Problem 2. (Opts) Suppose that we use a linear regression to model the relationship between X (years of education) and Y (average hourly wage)

Problem 2. (Opts) Suppose that we use a linear regression to model

the relationship between X (years of education) and Y (average hourly wage)

Problem 2. (Opts) Suppose that we use a linear regression to model the relationship between X (years of education) and Y (average hourly wage) based on survey data. The fitted model E[YIX] - -0.91 + 0.54 * X The scatter plot of (left) , residual plot (middle) , and quantile-quantile plot for residuals (right) are provided below. Do you observe anything that indicates a poor model fit? (Hint: Check the assumptions of linear model) Any suggestion on improving the model fit? to 10 oo 5.0 Predicted Values .10 Theoretical Quantiles 10

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