The Object of Hypothesis Testing To answer How"“good” is the estimated regression line How can we be sure that the estimated regression function (i. e,, the SRF) is in fact a good estimator of the true PRF? Y=B, +BX+u nonstochastic stochast stochastic a Before we tell how good an SRF is as an estimate of the true Pre. we should assume how the stochastic u terms are generatedThe Object of Hypothesis Testing To answer—— ◼ How “good” is the estimated regression line. ◼ How can we be sure that the estimated regression function (i.e., the SRF) is in fact a good estimator of the true PRF? Yi=B1+B2Xi+μi Xi———nonstochastic μi———stochasti Yi———stochastic ◼ Before we tell how good an SRF is as an estimate of the true PRF, we should assume how the stochastic μterms are generated