A large-landholding farmer outsmarts others by running an experiment to measure the effect of fertilizer application on agricultural yields. She randomly assigns her 400 land plots into two groups. In the first group, she inputs 20 kg/mu of fertilizers, while the other group receives 40 kg/mu of fertilizers. She also keeps other agricultural inputs (water, pesticides, labors) equally between these two groups. Let Y; denote the yields for ith plot, let X, denote the amount of fertilizer application per unit of land, (X; = 20 or 40), and consider the regression model Y = Bo + B X + li 1. Explain what the term u; represents. Proposal a potential reason that why different plots might have different values of ui? (2 point) 2. Is E[u|X] = 0 in this case? Explain why or why not? (1 point) 3. The estimated regression is Y = 300 +0.7X + fbi. (a) Is 3 = 0.7 an unbiased estimator? (1 point)