3-8 Finding a Line of best Fit We can use the general equation for a straight line Fa+bx to get the line that best“fts” the data However, this equation (y=a+bx) is completely deterministic Is this realistic? No. so what we do is to add a random disturbance term u into the equation y=a+Bx,+u, where t=1,2,3,4,53-8 Finding a Line of Best Fit • We can use the general equation for a straight line, y=a+bx to get the line that best “fits” the data. • However, this equation (y=a+bx) is completely deterministic. • Is this realistic? No. So what we do is to add a random disturbance term, u into the equation. yt =  +  xt + ut where t = 1,2,3,4,5