Suppose We Omit X₂ from the Following in a Bivariate $\beta$

question 1

Multiple Choice

Suppose we omit X₂ from the following in a bivariate model
Y_i = $\beta$ ₀ + $\beta$ ₁X_1i + $\varepsilon$ _i
And suppose X₂ is negatively related to X₁ and $\beta$ ₂ is positive, while $\beta$ ₁ is positive. What is the likely effect of omitting X₂ on our estimate of $\beta$ ₁?

• A) No effect; \(\beta\)₁hat will be unbiased.
• B) \(\beta\)₁hat will be more positive than it should be.
• C)\(\beta\)₁hat will be less positive than it should be.
• D) \(\beta\)₁hat will equal zero.

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