ECO 321 Fall 2016 Homework 3 Due Friday Oct 28 by 5pm Please also cut and paste at the end of your submission the R code you have used in problem 2...

I need the first question to be solved. (a) Show that the OLS estimator of β1 obtained from model (1) is biased.(b) When is this bias equal to 0?(c) Derive the OLS estimators of β1 and β2 from model (2).(d) Show that, when the sample covariance between x1i and x2iis equal to 0, thenthe OLS estimator of β1 derived in (c) is the same as the OLS estimator of β1derived in (a).