Question
Consider the following simple linear regression model: wage = 30 + B1educ + u (5), where educ is years of education. Assume E(uleduc) =
Consider the following simple linear regression model: wage = 30 + B1educ + u (5), where educ is years of education. Assume E(uleduc) = 0 and Var(u | educ) = 02educ. In case that heteroskedasticity is detected, which of the following transformed equation has a homoscedastic error term? Group of answer choices wage = 30 +31educ + u wage/(educ1/2) = B0/(educ1/2) + 31/(educ1/2) + u/(educ1/2) wage/(educ2) = 30/(educ2)+ B1/(educ2) + u/(educ2) wage/educ = 30/educ + B1/educ + u/educ
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