Recall figure 15.3. Assume that i is normally distributed with E(i) = 0 and V(i) = 36,000,000.

Recall figure 15.3. Assume that εi is normally distributed with E(εi) = 0 and V(εi) = 36,000,000.

(a) What is the critical value, call it Nâ•›.33, such that P(εi < Nâ•›.33) = .67?

(b) If P(yi < 50,000) = .67, what must E(yi) be?

(c) We want to choose a and b such that yˆ a b( ) i = + 16 is equal to the value we found in part

b. Find two pairs of values for a and b that accomplish this.