Exercise 2.10.4 Consider the model yi = 1xi1 +2xi2 +ei, eis i.i.d. N(0, 2). There are 15
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Exercise 2.10.4 Consider the model yi = β1xi1 +β2xi2 +ei, eis i.i.d. N(0,σ 2).
There are 15 observations and the sum of the squared observations is YY = 3.03.
Use the normal equations given below to answer parts
(a) through (c).
(a) Estimate β1, β2, and σ 2.
(b) Give 98% confidence intervals for β2 and β2−β1.
(c) Perform an α = 0.05 test for H0 : β1 = 0.5.
The normal equations are
15.00 374.50 374.50 9482.75
β1
β2
=
6.03 158.25
.
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