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Chapter 2: Simple Linear Regression

Chapter 2: Simple Linear Regression

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2 Ordinary Least Square Estimation The method of least squares is to estimate β 0 and β 1 so that the sum of the squares of the differ- ence between the observations yiand the straight line is a minimum, i.e., minimize S(β 0,β 1) = Xn i=1 (yi−β 0 −β 1xi) 2.

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