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Unformatted text preview: Economics 120B Name: _________________________ Professor Yongil Jeon February 24, 2005 Student ID#: _________________________ Exam 2: Econometrics 120B 1. (5 points) State whether the following statement is true or false. Instead of carrying out a multiple regression, we can get the same information from simple linear regressions of the dependent variable on each independent variable. Answer : False 2. (10 points) The method of least squares is used far more often than any alternative procedure to estimate the parameters of a multiple regression model. Explain the basis of this method of estimation and discuss why its use is so widespread. Answer : Under the normal assumptions (MLR1-MLR5), the estimators are BLUE. That is, they are the most efficient estimators of all unbiased linear estimators of the model parameters. Furthermore, least squares estimation is a simple estimation procedure included in all statistical software packages which is why its use is so widespread. 2 EXAM #2, ECON 120B, Winter 2005 2 3. An aircraft company wanted to predict the number of worker-hours necessary to finish the design of a new plane. Relevant explanatory variables were thought to be the planes top speed, its weight, and the number of parts it had in common with other models built by the company. A sample of twenty-seven of the companys planes was taken, and the by the company....
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