Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![Consider a simple OLS model that regresses college GPA (gpa) on high school GPA (hsgpa) and
parental income (pincome, in $1000 per month).
B₁ + B₂hsgpa + B3pincome + e.
Empirical estimation using observations generates the following STATA output.
gpa =
Source
Model
Residual
Total
gpa
hsgpa
pincome
_cons
SS
1273.27041
671.879965
df
Coef. Std. Err.
.6866603 .0103571
.3033177
.0066108
-.6697239 .0358777
Which statement below is incorrect?
MS
Number of obs
F(2, 3997)
Prob > F
R-squared
Adj R-squared
Root MSE
t P>|t|
=
=
=
4,000
[95% Conf. Interval]
A college student whose parents do not have an income is expected to earn a negative GPA.
High school GPA is a significant contributing factor to college GPA.
Besides high school GPA and parental income, there exist other factors that affect college GPA.
Every $1000 increase in parental income is expected to raise a student's college GPA by 0.303.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F51b939c1-6da3-4923-8e67-80e523e18a0f%2F3216c266-0629-44e5-a5e2-a47b1ef0b5e8%2Furnbm1m_processed.png&w=3840&q=75)
Transcribed Image Text:Consider a simple OLS model that regresses college GPA (gpa) on high school GPA (hsgpa) and
parental income (pincome, in $1000 per month).
B₁ + B₂hsgpa + B3pincome + e.
Empirical estimation using observations generates the following STATA output.
gpa =
Source
Model
Residual
Total
gpa
hsgpa
pincome
_cons
SS
1273.27041
671.879965
df
Coef. Std. Err.
.6866603 .0103571
.3033177
.0066108
-.6697239 .0358777
Which statement below is incorrect?
MS
Number of obs
F(2, 3997)
Prob > F
R-squared
Adj R-squared
Root MSE
t P>|t|
=
=
=
4,000
[95% Conf. Interval]
A college student whose parents do not have an income is expected to earn a negative GPA.
High school GPA is a significant contributing factor to college GPA.
Besides high school GPA and parental income, there exist other factors that affect college GPA.
Every $1000 increase in parental income is expected to raise a student's college GPA by 0.303.
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