Suppose You Are Estimating the Following Model: Y_i = β₀

question 18

Multiple Choice

Suppose you are estimating the following model: Y_i = β₀ + β₁X_i + U_i. 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?

• A) Your estimate for β₁ will be biased.
• B) Your model will suffer from the heteroscedasticity problem.
• C) Your estimate for β₁ will be biased and your model will suffer from the heteroscedasticity problem.
• D) None of the answers is correct.

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