Question

12. Suppose you are interested in studying the relationship between education and wage. More specifically, suppose that you believe the relationship to be captured by the following linear regression model, Wago-Po + ?| Education + u Suppose further that you estimate the unknown population linear regression model by OLS What is the difference between ? 1 and ?? o A. Both, ?? and ?' , are OLS estimators of true parameters of the population regression line. OB. ?' is a true population parameter, the slope of the population regression line, while ß, iste0LS estimator of ? 1. O C. 8 is a true population parameter, the stope of the population regression line, while B, is the OLS estimator of ? 1 Both. ? , and ?? . are true parameters of the population regression line. 0 D. 13. What is the difference between u and u? A. u represents the intercept of the population regression line, while ú is the difference between Wage and its predicted value Wage. u represents the deviation of observations from the population regression line, while u is the difference between Wage and its predicted value Wage. u represents the deviation of observations from the population regression line, while u is the OLS estimator of Wage. C. O D. urepresents the deviation of observations from the population regression line, while uis the difference between Wage and its predicted value Wage. 14. What is the difference between the OLS predicted value Wage and ElWagelEducation)? O A. E(WagelEducation) is the true value of Wage for given values of Education, while Wage s the OLS predicted value of Wage for given values of Education OB. W age is the expected value of Wage for given values of Education, while E(WagelEducation) is the OLs predicted value of Wage for given values of Education. E(wagelEducation) and Wage are equivalent representations of the true value of Wage for given values of Education. OC.

Answer 1

Answers for the questions given are as follows :

12) Option B

13) Option D ( u hat is the residual)

14) Option A