wage; = \hat{\beta}_0 + \hat{\beta}_1 educi where wage = yearly salary educ = years of education Given the OLS regression line, which of the following best represents the residual for the ith observation? The actual wage plus the wage predicted by the OLS regression line The square of the wage predicted by the OLS regression line The difference between the actual wage and the wage predicted by the OLS regression line The square of the actual wage
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Step 1: The residual is the difference between the actual value of the dependent variable and the predicted value of the dependent variable. Show more…
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WAGE = β0 + β1 EDUC + ε. Which of the following parameters represents the amount by which an additional year of education affects hourly wage? This model is known as a regression. In this regression, WAGE is the dependent variable, while EDUC is the independent variable. The residual, ε, is assumed to have a mean zero.
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