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An econometrician ran the following regression of average annual spending in a household (S) (measured in thousands of dollars) on the number of people in the family (N) for a random sample of 50 families:.Suspecting heteroscedasticity in the data, he then runs another regression as such:.Which of the following is true about the first model?

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MCQs on Econometrics, which is the use of statistical methods to develop theories or test existing hypotheses in economics or finance. 
 


An econometrician ran the following regression of average annual spending in a household (S) (measured in thousands of dollars) on the number of people in the family (N) for a random sample of 50 families:<br/><br><img src='https://www.fatskills.com/images2/GradExams/EE39AA7C-5701-4DE7-8DA7-C599F6469C74.png' height='25' width='254'/>.<br/>Suspecting heteroscedasticity in the data, he then runs another regression as such:<br/><br><img src='https://www.fatskills.com/images2/GradExams/F982AD7E-6F05-41AF-9187-A5BFAD497022.png' height='27' width='310'/>.<br/>Which of the following is true about the first model?<br/>






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