Each column of X contains the values for a particular independent variable.
The elements of a particular row of X, say row r, are the coefficients on the corresponding parameters in β that give ε(Y_r). Notice that β_0 has the constant multiplier 1 for all observations; hence, the column vector 1 is the first column of X. Multiplying the first row of Xby β, and adding the first element of ε confirms that the model for the first observation is