For all questions on this problem set, consider the following premise: You would like to estimate...

 

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For all questions on this problem set, consider the following premise: You would like to estimate a regression to explain the number of bowls of Cincinnati-style chili that will be sold each day by a restaurant you are planning on opening in the near future as a function of a number of variables. You decide on the following regression equation: BOWLS = 0 + FOOT + COMP + 3 ADS + WKND + t where BOWLS+ represents the number of bowls sold on day t, FOOT + represents the number of people that walk past your restaurant on day t (the foot traffic), COMP+ represents the number of close competitors who are open on day t, ADS+ represents your advertising spending in the week leading up to time t, and WKND is a dummy variable equal t to 1 if day t is a weekend. 4 (3 points). Do you believe that this regression equation satisfies the first part of assumption 4 from class (heteroskedasticity)? Why or why not? Be specific. For all questions on this problem set, consider the following premise: You would like to estimate a regression to explain the number of bowls of Cincinnati-style chili that will be sold each day by a restaurant you are planning on opening in the near future as a function of a number of variables. You decide on the following regression equation: BOWLS = 0 + FOOT + COMP + 3 ADS + WKND + t where BOWLS+ represents the number of bowls sold on day t, FOOT + represents the number of people that walk past your restaurant on day t (the foot traffic), COMP+ represents the number of close competitors who are open on day t, ADS+ represents your advertising spending in the week leading up to time t, and WKND is a dummy variable equal t to 1 if day t is a weekend. 4 (3 points). Do you believe that this regression equation satisfies the first part of assumption 4 from class (heteroskedasticity)? Why or why not? Be specific.