MKT 317 Lecture Notes - Lecture 12: Observational Error, Inverse Relation
Document Summary
Population regression model is y = 0 + 1x + e. 0 = intercept of the straight line on y axis (0, y) E = random error term due to the fact that the points don"t fall exactly on the line (stochastic relationship) Sample regression model is = 0 + 1x or = b 0 + b 1x. = estimated, predicted, or fitted value of y. No error term because all points will fall onto the line. N means normal: error terms are uncorrelated with each other in unnecessary observations. Normal distributed mean will fall onto line. I = 0 + 1xi (cid:314) estimate regression line (xi yi) = observe data point (xi, i) =estimated observed data point. Xi = specified value of the independent variable x. P 1 = estimate value of dependent variable corresponding to graph and illustration.
