Write Down, in General, the Variance-Covariance Matrix for the Multiple $\sigma _ { \mathrm { u } } ^ { 2 }$

question 17

Essay

Write down, in general, the variance-covariance matrix for the multiple regression error term U. Using the assumptions cov(ui,uj|XiXj)= 0 and var(ui|Xi)= $\sigma _ { \mathrm { u } } ^ { 2 }$ Show that the variance-covariance matrix can be written as $\sigma _ { \mathrm { u } } ^ { 2 }$ I_n.

---

Definitions:

Average Variable Cost Curve

A graphical representation showing how the average variable cost (AVC) of production changes with the level of output.

Marginal Cost

The cost added by producing one extra item of a product, essentially the change in total cost that arises when the quantity produced changes by one unit.

Variable Cost

Costs that vary directly with the level of production output, such as raw materials and direct labor costs.

Fixed Cost

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance.