Question: The formula for the sampling variance of B in simple regression, VB 2 P xi ' x 2 shows that, to estimate

The formula for the sampling variance of B in simple regression, VðBÞ ¼ σ2 P ε

ðxi ' xÞ

2 shows that, to estimate β precisely, it helps to have spread out xs. Explain why this result is intuitively sensible, illustrating your explanation with a graph. What happens to VðBÞ when there is no variation in X?

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