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Suppose that Yi=B0+B1XI+Ui where(Xi,Ui) are iid and Xi is a Bernoulli random variable withP(X=1)=.20. when X=1 Ui is N(0,4) when X=0 Ui is N(0,1)

 

Suppose that Yi=B0+B1XI+Ui where(Xi,Ui) are iid and Xi is a Bernoulli random variable withP(X=1)=.20. when X=1 Ui is N(0,4) when X=0 Ui is N(0,1) Show that the OLS regression assumptions are satisfied. Derive an expression for the large sample variance of 8,

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