(i).A. Suppose the relationship between consumption expenditures and householdincome of a representative sample of households in Ghana is specified as,Y₁ = B₁ + B₂X₁ + ε₁,where i refers to household i, and i = 1, 2,..., nIt is believed that while low income households have similar and less flexibleconsumption habits, high income households have rather flexible and variedconsumption habits.(ii).The consumption pattern so described corresponds to a situation where at leastone of the fundamental assumptions to the Classical Linear Regression Model isviolated,Identify that or those of the fundamental hypotheses that are systematicallyviolated.Indicate the consequences of the violation of those fundamental hypotheses onthe ordinary least squares estimation of the specified model.(iii). Suggest an alternative estimation approach which corrects for the identifiedviolation.L}]

Given that the relationship between consumption expenditure and household income is specified asThe…

Answered: (i). Identify that or those of the…

Calculus For The Life Sciences

2nd Edition

ISBN:9780321964038

Author:GREENWELL, Raymond N., RITCHEY, Nathan P., Lial, Margaret L.

Publisher:GREENWELL, Raymond N., RITCHEY, Nathan P., Lial, Margaret L.

Chapter1: Functions

Section1.2: The Least Square Line

Problem 7E

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