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Consider the following regression model: yi = 0 + ui 1 where we assume that E [ui] = 0. You have a random sample of

Consider the following regression model: yi = 0 + ui 1 where we assume that E [ui] = 0. You have a random sample of N independent observations y1, ..., yN from a population that satisfies this model. (a) What is the expression of 0 which minimizes the sum of the residuals squared? Write and solve the first order condition of the minimization problem to be solved. (b) Calculate SCE and R2 for this model by justifying your calculations

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