Suppose you formulate the following simple linear econometric model to assess th

Posted: October 28th, 2023

Suppose you formulate the following simple linear econometric model to assess the
impact of background educational performance of students on their educational
achievement in higher educational institute. GPA = ̂ + ̂EER + Ui
Where: GPA is GPA of the ith student in higher institution.
EER is higher institution entrance exam result of the ith student.
is the random disturbance term.
Using the above information answer the questions below
a. Explain the need for the insertion of
in your model.
b. List the main factors that are absorbed in this model by .
c. State all the necessary conditions that must be met for successful results
regression analysis to estimate the above model by OLS