Consider the following model of the factors that influence a person's annual wage: Y = β0 + β1X1 + β2X2 + β3X1X2 + β4X3 + u where Y = annual wage, in dollars X1= years of formal education X2 = age, in years X3 = variable equal to 1 if male, 0 otherwise U = error term Which of the following is the interpretation of β1 alone? The effect of X1 on Y when X2 = 0 The effect of X1 on Y when X2 is at its median value. The effect of X1 on Y, holding all else equal. The effect of X1 on Y when X2 is at its mean value.
Consider the following model of the factors that influence a person's annual wage: Y = β0 + β1X1 + β2X2 + β3X1X2 + β4X3 + u where Y = annual wage, in dollars X1= years of formal education X2 = age, in years X3 = variable equal to 1 if male, 0 otherwise U = error term Which of the following is the interpretation of β1 alone? The effect of X1 on Y when X2 = 0 The effect of X1 on Y when X2 is at its median value. The effect of X1 on Y, holding all else equal. The effect of X1 on Y when X2 is at its mean value.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Consider the following model of the factors that influence a person's annual wage:
Y = β0 + β1X1 + β2X2 + β3X1X2 + β4X3 + u
where
- Y = annual wage, in dollars
- X1= years of formal education
- X2 = age, in years
- X3 = variable equal to 1 if male, 0 otherwise
- U = error term
Which of the following is the interpretation of β1 alone?
- The effect of X1 on Y when X2 = 0
- The effect of X1 on Y when X2 is at its median value.
- The effect of X1 on Y, holding all else equal.
- The effect of X1 on Y when X2 is at its mean value.
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