Let wages denote hourly wages, educ years of education, and exper years of experience, and suppose log(wages) = Bi + Bzeduc + B3exper + e where E[e|educ, exper] = 0. Let b, b2, and bz be our estimates for B1. B2, and ß3 and r23 denote the sample correlation between {educ, }" and {exper,}". Which of the following statements is true? %3D O a. The variance of bz does not depend on r23. O b. The variance of b2 is increasing in E",(educ, - educ,)² (all else equal). C. The variance of ba is at least as large as g2/" (educ educ 12 - Varlale
Let wages denote hourly wages, educ years of education, and exper years of experience, and suppose log(wages) = Bi + Bzeduc + B3exper + e where E[e|educ, exper] = 0. Let b, b2, and bz be our estimates for B1. B2, and ß3 and r23 denote the sample correlation between {educ, }" and {exper,}". Which of the following statements is true? %3D O a. The variance of bz does not depend on r23. O b. The variance of b2 is increasing in E",(educ, - educ,)² (all else equal). C. The variance of ba is at least as large as g2/" (educ educ 12 - Varlale
A First Course in Probability (10th Edition)
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Author:Sheldon Ross
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Chapter1: Combinatorial Analysis
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![Let wages denote hourly wages, educ years of education, and exper years of experience, and suppose
log(wages) = f1 + 62educ + B3exper +e
where E[eleduc, exper] = 0. Let b1, b2, and bz be our estimates for B1, B2, and ß3 and r23 denote the sample
correlation between {educ,}", and {exper, }". Which of the following statements is true?
II
O a. The variance of b3 does not depend on r23.
O b. The variance of b, is increasing in E" (educ, – educ,)² (all else equal).
O c. The variance of b2 is at least as large as o²/ E", (educ, - educ,)2 for o?
Var(eleduc, exper).
O d. The variance of b2 depends on the sign of r23.
O e. The variance of b2 always increases as r23 increases (all else equal).](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd38dd18e-d942-4f95-a4cd-67eb468855c4%2Fcea7edde-07a2-48f9-922b-53b2e1f3467c%2F99i928_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Let wages denote hourly wages, educ years of education, and exper years of experience, and suppose
log(wages) = f1 + 62educ + B3exper +e
where E[eleduc, exper] = 0. Let b1, b2, and bz be our estimates for B1, B2, and ß3 and r23 denote the sample
correlation between {educ,}", and {exper, }". Which of the following statements is true?
II
O a. The variance of b3 does not depend on r23.
O b. The variance of b, is increasing in E" (educ, – educ,)² (all else equal).
O c. The variance of b2 is at least as large as o²/ E", (educ, - educ,)2 for o?
Var(eleduc, exper).
O d. The variance of b2 depends on the sign of r23.
O e. The variance of b2 always increases as r23 increases (all else equal).
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