Our review of elassieal estimation used the data in Table 13.1, first to estimate a population mean, then a one variable linear model and then a two variable linear model. In eaeh ease the population was eharaeterized by an underlying Normal distribution. Further reealI the data were generated from model [m], using Yt =

500,000 + 25x1t + 100x2t + Et. The error terms and independent variables were independently drawn from E, - N(0;50,000Z), XU - N(1O,000;900Z), and xz, -

N(1,000;150Z). Determine the varianee of the underlying population for the first ease, and of the error term in the two regressions. Compare these varianees with the estimates that were produeed using the sample data.

AppendixLO1