What is the variance of u conditional on income, vartul inc)? Consider the following savings model: Where inc income and sav = savings A. var(inc*e) OB. inc*var(e) OC var(sqrt(inc)) OD. var(e) sav = Bo + Brinc + u, u = Vince

Microeconomic Theory
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Chapter7: Uncertainty
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What is the variance of u conditional on income, var(ulinc)?
Consider the following savings model:
Where inc = income and sav = savings
A. var(inche)
B. incvar(e)
C. var(sqrt(inc))
D. var(e)
sav= Bo + B₁inc + u, u = √inc * e
Transcribed Image Text:What is the variance of u conditional on income, var(ulinc)? Consider the following savings model: Where inc = income and sav = savings A. var(inche) B. incvar(e) C. var(sqrt(inc)) D. var(e) sav= Bo + B₁inc + u, u = √inc * e
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