2. Omitted variable bias:a. What is omitted variable bias?b. What are the two necessary conditions for an omitted variable Z to result inomitted variable bias?c. Suppose we regress an outcome variable Y on an independent variable X, but weomit controlling for variable Z. How will the coefficient estimate for X be biasedin the following cases?i. Z is negatively correlated with both X and Yii. Z is positively correlated with both X and Yiii. Z positively correlated with X but negatively correlated with Yiv. Z negatively correlated with X but positively correlated with Yv. Z is not correlated with either X or Yvi. Z is positively correlated with X but not correlated with Y

c. Analysis of each case and its impact on the coefficient estimate for X: i) Z is negatively…

Answered: 2. Omitted variable bias: a. What is…

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter2: Mathematics For Microeconomics

Section: Chapter Questions

Problem 2.16P

See similar textbooks

Similar questions

"The effect of measurement error in Y is different frommeasurement error in X". Explain How?
What is this equation used for? What do the variables mean? Can you give an example how a research study can be applied to this formula? Does it account for control variables ?
Assume that the dummy variables Marriedal if married (0 if not married), Sex=1if male (0 if female), and that you estimate the equation: loglwage) le + B,'Married + B'Sex + B,(Married Sex). The estimated log wage for an unmarried woman can be estimated by: Bo
3)
In the Managerial Solution, we estimated a focus group's demand curve for iTunes downloads. The estimated coefficient on price was-413, and the 1-statistic was -12.8. nage d coe ndard Using these values, what is the standard error of this estimated coefficient? est The standard error of the price coefficient is (Enter your response rounded to two decimal places) Suppose we had another focus group sample, ran a regression on that sample, and obtained the same coefficient on price but with a standard error five times as large What can you say about the statistical significance of the price coefficient in this second sample? rt A The price coefficient would be statistically significantly different than zero at the 0.05 confidence level Sulag 50,00 t-Val Stan would be would not be
Please answer all 3 sub-sections of this wiestoon
Solve it correctly
2. Using the method of Arc elasticity to solve for the demand elasticity of the market for sample bags with the following changes in the market occurred. a. Q2 = 140; Q1= 150 b. P2 = 500; P1 = 450 c. 12 = 700; 11 = 200 Pr12 = 12; Pr11 = 11 Pr22 = 9; Pr21 = 15 a. Show your solutions and interpret results.
QUESTION 15 Suppose that if the null that alpha and beta both equal one is true a tost statistic you have calculated s dnitributed as an Fstatistic with 3 and 30 degroes of freedom for the numerator and denominator respectivoly What critical value cuts off 5% of the upper tal of this disitritution? OA.5.168 O B.9 277 OC8617 O D. None of the above
10 Suppose that in a particular state a standardized test is given to all graduating se- niors. Let score denote a student's score on the test. Someone discovers that perfor- mance on the test is related to the size of the student's graduating high school class. The relationship is quadratic: score = 45.6+ .082 class .000147 class², where class is the number of students in the graduating class. (i) How do you literally interpret the value 45.6 in the equation? By itself, is it of much interest? Explain. (ii) From the equation, what is the optimal size of the graduating class (the size that maximizes the test score)? (Round your answer to the nearest integer.) What is the highest achievable test score? (iii) Sketch a graph that illustrates your solution in part (ii). (iv) Does it seem likely that score and class would have a deterministic relationship? That is, is it realistic to think that once you know the size of a student's graduating class you know, with certainty, his or her test…
Please no written by hand The assumption of normally distributed errors means that... A. errors can be ignored when doing regression modelling. B. the OLS estimators can also be assumed to be normally distributed since they are a linear functions of the errors. C. the OLS estimators can also be assumed to be normally distributed since they are BLUE. D. the OLS estimators can also be assumed to be normally distributed since they are minimum variance. E. the regression model will not be subject to specification error.
Exercise 1.9. The pivotal mechanism is used to decide whether a new park should be built. There are 5 individuals. According to the proposed project, the cost of the park would be allocated as follows: individual 1 2 3 4 5 share of cost C₁ = $30 C₂ = $25 C3 = $25 C4 = $15 С5 $5 1, For every individual i = perceived gross loss, if negative) from having the park built. The v/s are as follows: 5, let v, be the perceived gross benefit (if positive; individual 1 2 3 4 5 gross benefit V₁ = $60 V2= $15 V3 = $55 V4 = $-25 V5 = $-20 (Thus the net benefit (loss) to individual / is V, -C). Individual / has the following utility of wealth function (where m, denotes the wealth of individual 1): m₁ if the project is not carried out U₁ = m.+Vi if the project is carried out (Let m, be the initial endowment of money of individual / and assume that m is large enough that it exceeds c, plus any tax that the individual might have to pay.) (a) What is the Pareto-efficient decision: to build the park or…

SEE MORE QUESTIONS

Recommended textbooks for you

Microeconomic Theory

Economics

ISBN:

9781337517942

Author:

NICHOLSON

Publisher:

Cengage

Managerial Economics: Applications, Strategies an…

Economics

ISBN:

9781305506381

Author:

James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:

Cengage Learning

Microeconomic Theory

Economics

ISBN:

9781337517942

Author:

NICHOLSON

Publisher:

Cengage

Managerial Economics: Applications, Strategies an…

Economics

ISBN:

9781305506381

Author:

James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:

Cengage Learning

SEE MORE TEXTBOOKS