Scatter plot → visual check for linearity. Slide 5: The OLS Method – Finding the Best Line Priya wants the line that minimizes the sum of squared errors (vertical distances). She uses Ordinary Least Squares (OLS) .
Here’s a short, engaging story you can use as a narrative thread for a based on Gujarati’s Basic Econometrics . It illustrates key concepts like regression, OLS, assumptions, and hypothesis testing. Story Title: The Coffee Shop Mystery Slide 1: Introduction – The Question Scene: A small coffee shop owner, Priya , notices that on warmer days, she sells more iced coffee. But on rainy days, hot coffee sells more. She wants to know: 👉 How much does temperature actually affect iced coffee sales? basic econometrics gujarati ppt
Priya feels confident, but knows other factors (humidity, day of week) could help. She predicts sales for 35°C: (20 + 3.5*35 = 142.5) cups. Scatter plot → visual check for linearity
Sample data → estimate population relationship. Slide 4: Plot the Data – Scatter Diagram Students see a positive slope. Priya draws a line through the points. Here’s a short, engaging story you can use