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Linear Regression Model

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Linear Regression Model
Econ 122B Problem Set 2 Name(Print)______________________
Due in class Feb 6 UCI ID_____________________________ Multiple­Choice Questions (Choose the best answer, and briefly explain your reasoning.) 1. Assume we have a simple linear regression model: . Given a random sample from the population, which of the following statement is true? a. OLS estimators are biased when BMI do not vary much in the sample.
b. OLS estimators are biased when the sample size is small (say 20 observations).
c. OLS estimators are biased when the error u captures perseverance and self‐ control, and you believe that people who are perseverant and have more self‐ control are less likely overweight.
d. None of the above.

2. Suppose you are interested in the effect of class attendance on college performance, and plan to estimate the following model:
, where colGPA is current GPA and skipped is the average number of classes skipped per week. Due to lack of information, students’ motivation is omitted from the regression. Assume that more motive students are less likely skip classes. OLS estimator of the coefficient for skipped will most likely a) be biased away from zero, so that the impact of skipped on colGPA is overestimated. b) be biased toward zero, so that the impact of skipped on colGPA is underestimated.
c) be unbiased.
d) be biased, but not enough information to determine if the impact is overestimated or underestimated.

Questions 3‐5 are based on the following information:

Consider the following population model for household spending on food:
, where food is food expenditure in dollars, inc is income, educ is the education level of household head, hhsize is the size of a household. 1

3. Suppose a researcher estimates this model, one can
a) be certain

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