Answered: Problem 2. (SW 11.8(a-c)) Consider the… | bartleby

Algebra & Trigonometry with Analytic Geometry

Algebra & Trigonometry with Analytic Geometry

13th Edition

ISBN:9781133382119

Author:Swokowski

Publisher:Swokowski

Chapter10: Sequences, Series, And Probability

Section10.8: Probability

Problem 32E

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Problem 2. (SW 11.8(a-c)) Consider the linear probability model Y₁ = Bo + B₁X₁ + U₁, and assume
that E(u₂|X) = 0.
(a) Show that Pr(Y; = 1|X₂) = Bo + B₁X₁.
(b) Show that var(u₁|X;) = (B₁ + B₁X;)[1 − (B₁+ B₁X;)]. [Hint: You will need the formula for the
variance of a Bernoulli variable, see, e.g., SW Equation (2.7).]
(c) Is u heteroskedastic? Explain.

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