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This question was created from smt4 - S17.pdf https://www.coursehero.com/file/29411435/smt4-S17pdf/

6. Consider a linear model to explain monthly beer consumption:
beer = Bo + Bjinc + B2price + Byedu + BA female tu
E(u | inc, price, educ, female) = 0
Var(u | inc, price, educ, female) = 2inc2
Write the transformed equation that has a homosckedastic error term.

To find the transformed equation with... View the full answer

Given,
Var ( Ul inc., price, edue, female ) = 62 inez
Let h(x ) = inc2
Vh (x ) = inc
'E the transformed equation is obtained
by dividing the original equation by
inc .
:. we have.
inc.
Beer = Bo...

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