Refer to the equation Q³ = ß₂ + ß₂P+ ß₂P” + ß¿P³ + ß²TAX+e where Q' is annual quantity supplied, P is the price of the product, P' is the price of resources, Ps is the price of goods that are substitutes in production, and TAX is the excise tax on the product. This equation is A. an economic model B. an econometric model C. a market model D. a non-linear model The following Mincer equation has been used to estimate wages: In (W) = ß₁ + ß₂EDU + ß3EXPER + ß4 EXPER² + e, where W is income, EDU is years of education and EXPER is years of experience in the field. If you suspect males earn higher wages than females and that the wage difference increases with education how would you adjust the econometric model to estimate wages? A. Include a binary variable for gender, MALE B. Include an interaction term equal to MALE* EXPER C. Include an indicator variable for MALE and one for FEMALE D. Include a binary variable for MALE and an interaction term equal to MALE *EDUC Assume that you have collected a sample of observations from over 100 households and their consumption and income data. Using these observations, you estimate the regression C=Bo+ßıY+U, where C is consumption and Y is disposable income. The estimate of B1 will tell you A. AIncome/AConsumption B. The amount you need to consume to survive C. Consumption/Income D. AConsumption/AIncome Consider the quadratic regression model TESTSCORE = 607.3+3.85INCOME - 0.0423INCOME². If income increased from 10 to 11 ($10,000 to $11,000), then the predicted effect on test scores would be A. 3.85 B. 3.85-0.0423 C. Cannot be calculated because the function is non-linear D. 2.96
Refer to the equation Q³ = ß₂ + ß₂P+ ß₂P” + ß¿P³ + ß²TAX+e where Q' is annual quantity supplied, P is the price of the product, P' is the price of resources, Ps is the price of goods that are substitutes in production, and TAX is the excise tax on the product. This equation is A. an economic model B. an econometric model C. a market model D. a non-linear model The following Mincer equation has been used to estimate wages: In (W) = ß₁ + ß₂EDU + ß3EXPER + ß4 EXPER² + e, where W is income, EDU is years of education and EXPER is years of experience in the field. If you suspect males earn higher wages than females and that the wage difference increases with education how would you adjust the econometric model to estimate wages? A. Include a binary variable for gender, MALE B. Include an interaction term equal to MALE* EXPER C. Include an indicator variable for MALE and one for FEMALE D. Include a binary variable for MALE and an interaction term equal to MALE *EDUC Assume that you have collected a sample of observations from over 100 households and their consumption and income data. Using these observations, you estimate the regression C=Bo+ßıY+U, where C is consumption and Y is disposable income. The estimate of B1 will tell you A. AIncome/AConsumption B. The amount you need to consume to survive C. Consumption/Income D. AConsumption/AIncome Consider the quadratic regression model TESTSCORE = 607.3+3.85INCOME - 0.0423INCOME². If income increased from 10 to 11 ($10,000 to $11,000), then the predicted effect on test scores would be A. 3.85 B. 3.85-0.0423 C. Cannot be calculated because the function is non-linear D. 2.96
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:6. Refer to the equation Q³ = B₁ + ß₂P+ß₂P² + ß²P³ + ß,TAX +e where Q' is annual
quantity supplied, P is the price of the product, P' is the price of resources, P³ is the
price of goods that are substitutes in production, and TAX is the excise tax on the
product. This equation is
A. an economic model
B. an econometric model
C. a market model
D. a non-linear model
7. The following Mincer equation has been used to estimate wages:
In (W) = B₁ + B₂EDU + ß3EXPER + ß4 EXPER² + e,
where W is income, EDU is years of education and EXPER is years of experience in the
field. If you suspect males earn higher wages than females and that the wage difference
increases with education how would you adjust the econometric model to estimate
wages?
A. Include a binary variable for gender, MALE
B. Include an interaction term equal to MALE* EXPER
C. Include an indicator variable for MALE and one for FEMALE
D. Include a binary variable for MALE and an interaction term equal to MALE *EDUC
8. Assume that you have collected a sample of observations from over 100 households and
their consumption and income data. Using these observations, you estimate the regression
C=Bo+BıY+U,
where C is consumption and Y is disposable income. The estimate of B₁ will tell you
A. AIncome/AConsumption
B. The amount you need to consume to survive
C. Consumption/Income
D. AConsumption/AIncome
9. Consider the quadratic regression model
TESTSCORE = 607.3+3.85INCOME - 0.0423INCOME².
If income increased from 10 to 11 ($10,000 to $11,000), then the predicted effect on test
scores would be
A. 3.85
B. 3.85-0.0423
C. Cannot be calculated because the function is non-linear
D. 2.96
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