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Let {(yi; xi); 1 ≤ i ≤ n} be an i.i.d sequence of random variables where yi and xi satisfy the linear relationship yi = β0 + β1xi + ∈i with Cov(xi; ∈i) = 0 and yi ∈ {0, 1} (i.e. yi is a binary dependent variable).
(a) Describe the main limitations of estimating β1 via OLS.
(b) Describe an alternative approach to estimation based on the Probit Model. Note that I expect you to be able to formulate the likelihood function.
suppose ismail were to eat five pizzas per week.what is the total value ismail would place on his five weekly pizzas?
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