//  File New-Lec4-01-01-03-01.txt. Edition 7/14/2010.


//  Lab Specs
//    Window Title
         Distribution_of_Error_Terms
//    List of Error Variances
         50. 500. 150. 500.
//    List of Heter Values
         -2.0 2.0 1.0 .0
//    List of Rho's
         -.9 .9 .3 .0
//    List of XECorr's
         -.9 .9 .3 .0


//  Problem Specs
//    Hetero visible (0 not visible, -1 visible)
//    Rho visible (0 not visible, -1 visible)
//    XECorr visible (0 not visible, -1 visible)
//    Graph visible (0 none, -1 et versus et-1, 1 e versus x)
//    Pause checked (0 not checked, -1 checked)
//    ErrVar value
//    Hetero Factor value
//    Rho value
//    XECorr value


` -1 0 0 0 -1 500 0 0 0
Objective: Illustrate the ordinary least sqaures' first standard error term premise: The 
 variance of the error term's probability distribution for each student is the same. 
 The first error term premise rules out heteroskedasticity.
 
 
` -1 0 0 0 -1 500 0 0 0
1a. Click the Start button. Three histogram's appear at the top of the window. One histogram for
 student 1's error term, one for student 2's error term, and one for student 3. The mean and variance
 of the numerical values of each student's error terms are reported below each histogram.
_
1b. Click the Continue button a few more times until you are confident that you understand
 the histograms.


` -1 0 0 0 0 500 0 0 0
Note that 0 is specified in the Heter list. Heteroskedasticity is not present. Also,
 the Pause checkbox has been cleared. Click Continue and then after many, many
 repetitions click Stop.
_
2a. Focus on the histograms. How are the variances of the 
 numerical values of each student's error terms related?
_
2b. What does the relative frequency interpretation of probability suggest about
 the variance of the error term's probability distribution for each student?


` -1 0 0 0 0 500 1 0 0
The heteroskedasticity factor has the changed from 0 to 1 in the Heter list. Heteroskedasticity
 is now present. Click Start and then after many, many repetitions click Stop.
_
3a. Focus on the histograms. How are the variances of the 
 numerical values of each student's error terms related?
_
3b. What does the relative frequency interpretation of probability suggest about
 the variance of the error term's probability distribution for each student?