17.3 Suppose that Y and X are related by the regression Y = 1.0 + 2.0X + u.

A researcher has observations on Y and X, where 0 … X … 20, where the conditional variance is var(ui 0 Xi = x) = 1 for 0 … x … 10 and var(ui 0 Xi = x) = 16 for 10 6 x … 20. Draw a hypothetical scatterplot of the observations (Xi, Yi), i = 1,

c, n. Does WLS put more weight on observations with x … 10 or x 7 10? Why?