Problem 2. [SW 14.9] You have a sample of size n = 1 with data y₁ = 2 and x₁ = 1. You are interested in the value of 3 in the regression Y = XB+ u. (Note there is no intercept.) (a) Plot the sum of squared residuals (y₁ - bx₁)² as function of b. You can choose your own range for b, one reasonable choice is b € [-2,5]. (Use any software you prefer. Excel is one option.) (b) Show that the least squares estimate of 3 is BOLS = 2. (c) Using ARidge = 1, plot the Ridge penalty term ARidgeb² as a function of b. (d) Using XRidge = 1, plot the Ridge penalized sum of squared residuals (y₁ − bæ₁)² + ARidgeb². Please put all three lines in one plot. Ridge (e) Find the value of 3 (f) Using ARidge = 0.5, repeat (c) and (d) (put both lines in one plot). Find the value of Ridge (g) Using ARidge = 3, repeat (c) and (d) (put both lines in one plot). Find the value of Ridge

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