- xi are non-random, observed with negligible error
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ei are random variables with zero mean and constant variance (uniform variance assumption)
![](../images/eq_0.gif)
- ei are uncorrelated from observation to observation
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error in the measurement of the xi is assumed to be small compared to the range
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mean and variance of distribution of yi at specific value of xi
E(yi)=b0 + b1 xi
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var(yi)=var(ei)
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