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Question 1 (15 marks) 1. = 2. 3. Consider the following equation: Y = Be + B,X1i + B2Xz1 + B3X1 + BAX11X2 + B5X3i + uị, what is the marginal effect of X11 on Y? How could the inclusion of an additional control variable affect the precision of the estimate of the main explanatory variable of interest? Assume we regress the profitability of a company on the age of the CEO. We do not control for the age of the company though and more mature companies tend to be more profitable. What is the direction of the bias in our regression if any? What is an iid sample? Give an example where the iid assumption fails. What is heteroscedasticity and how do we deal with it? 4. 5. Question 2 (8 marks) 1. What is the difference between unbiasedness and consistency (please explain the intuition)? Can we have extreme multicollinearity in a model where we have three left hand side variables and none of them is perfectly correlated with any other? 2.