Given below are two statements: one is labelled as Assertion (A) and the other is labelled as Reason (R). Assertion (A): The presence of the heteroscedasticity problem in ordinary least squares (OLS) regression analysis implies that the estimators remain unbiased but are no longer efficient (i.e., they are no longer BLUE). Reason (R): In the presence of heteroscedasticity, the conventional OLS estimators of the variances of the coefficients are also unbiased. In the light of the above statements, choose the most appropriate answer from the options given below:

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Economics · Econometrics

Verified Solution4 OptionsUpdated: October 2026👁️1 View

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(A) is correct but (R) is not correct

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Answer 1

(A) is not correct but (R) is correct

Answer 2

(A) is correct but (R) is not correct

Answer 3

Both (A) and (R) are correct but (R) is not the correct explanation of (A)

Answer 4

Both (A) and (R) are correct and (R) is the correct explanation of (A)

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