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Problem:
(a) Consider the Classical Linear Regression Model (CLRM)
Yi = α + βXi + εi (i) Using the method of ordinary least squares (OLS), derive an expression for α and β.
(ii) Prove that the OLS estimators derived in (a) above are unbiased.
(b) Illustrate clearly the concept of dummy variable trap.
In this section, we ask you to write down a simple, formal, mathematical model. A small number of points will be awarded for an intuitive discussion of the problem, but most of the
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