Suppose you are estimating the following model: Yi = β 0 + β 1 X i + Ui . Suppose also that you only observe values of Y that are above 50. What is the consequence of this selection on the values of Y? Your estimate for β1 will be biased. Your model will suffer from the heteroscedasticity problem. Your estimate for β1 will be biased and your model will suffer from the heteroscedasticity problem. None of the answers is correct.
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Suppose you have assumed the following data-generating process: Yi = α + β1X1i + β2X2i + Ui. You further assume that U is uncorrelated with X1 and X2. For each of the four possibilities below, determine whether you can get consistent estimates of the parameters for the determining function using regression if your sample of Y, X1, and X2 is selected according to: 1. X1 > 100 2. 80 < X1 < 150 and 40 < X2 < 205 3. Y < 200 4. 50 < X1 < 150 and Y > 75
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