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Estimating error variance in a five-point line fit

Question

Bob fits Y=β0+β1x+ϵY=\beta_0+\beta_1x+\epsilon, with Eϵ=0\mathbb{E}\epsilon=0 and Var⁡ϵ=σ2\operatorname{Var}\epsilon=\sigma^2, by least squares to these five points: (2,3)(2,3), (1,1)(1,1), (0,1)(0,1), (−1,0)(-1,0), (−2,0)(-2,0). Give the usual unbiased estimate of σ2\sigma^2.

Short answer

11/3011/30. The fitted line is y^=1+0.7x\hat y=1+0.7x, leaving residuals 0.4,−0.3,0,−0.7,0.60.4,-0.3,0,-0.7,0.6 (ordered by increasing xx). Their squares sum to 1.11.1, and dividing by n−2=3n-2=3 degrees of freedom gives 1130\tfrac{11}{30}.

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