Scenario 38-1. Consider the following OLS model applied to the data for workers wages and years of schooling, where e; stands for the residual:WAGE = -10.7+ 3.16 × SCHOOL + e;-(20.7) (1.35)Refer to Scenario 38-1. Suppose that the residual term is non zero and reflects all the forces that influence wages other than years of schooling. If ; is correlated with schooling, the estimate OLS makeson the effect of schooling on wages000is inaccurate.lies between $0.46 and $5.86.lies between $8 and $13.4.is accurate.

This conclusion is drawn because if the residual term 𝑒𝑖 is non-zero and correlates with the…

Answered: Scenario 38-1. Consider the following…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Suppose we regress individuals' health insurance coverage status on yearly earnings (unit: $1,000), we get P = 0.10 + 0.009 • X, where Y is a dummy equal to 1 if the person is covered by health insurance and 0 otherwise. X is yearly earning. Assume that the average health insurance coverage rate among the studied sample is 0.2. a. What is the percentage point increase in health insurance coverage rate if yearly earning increases by $2,000? b. What is the percentage increase (relative to sample mean) in health insurance coverage rate if yearly earning increases by $2,000?
1- Consider a basic matching model where the number of matches between unemployed individuals and firms is determined by the matching function M = mu“v(1-a). Explain the implication of changes in m and a. In other words, what happens when the matching gets more efficient or changes importance between unemployed individuals and vacancies.
Eastman Publishing Company is considering publishing an electronic textbook about spreadsheet applications for business. The fixed cost of manuscript preparation, textbook design, and web site construction is estimated to be $156,000. Variable processing costs are estimated to be $9 per book. The publisher plans to sell single-user access to the book for $41. Through a series of web-based experiments, Eastman has created a predictive model that estimates demand as a function of price. The predictive model is demand 4,000 -6p, where p is the price of the e-book. (a) Construct an appropriate spreadsheet model for calculating the profit/loss at a given single-user access price taking into account the above demand function. What is the profit estimated by your model for the given costs and single user access price (in dollars). (b) Use Goal Seek to calculate the price (in dollars) that results in breakeven. (Round your answer to the nearest cent.) (c) Use a data table that varies price…
In 2006, Evo Morales assumed the presidency in Bolivia, a South American country in which official commerce is done in Spanish. Morales was the first Bolivian president of indigenous decent. As president, he quickly instituted reforms that were designed to reduce discrimination against indigenous populations with the aim of eventually reducing inequality. Suppose discrimination before Morales took two forms: discrimination in education by not providing state funds to educate all children (and particularly not educating indigenous children in Spanish) and discrimination in the job market by firms not willing to hire indigenous workers.a. In terms of education, which policy do you think would be more successful at combating discrimination and inequality: (1) providing state funds to educate all people exclusively in their native languages or (2) providing state funds for a public education system that requires all people to learn Spanish, as well as a second, indigenous language? Why?b.…
23. An education economist estimated the wage equation to determine the rate of return to an additional year of education and obtained ln(WAGE) = -0.5220+0.1075×EDUC. it is anticipated that ability ( attributes, such as intelligence, creativity, perseverance and industriousness) is positively correlated with UDUC. If a measure of a bility is omitted from the model the estimated return to education A. Is biased downwards B. Is biased upwards C. Cannot be estimated D. All the above
Consider the population regression of log earnings [Y;, where Y,= In(Earnings,;)] against two binary variables: whether a worker is married (D₁, where D₁;= 1 if the th person is married) and the worker's gender (D2;, where D₂;= 1 if the th person is female), and the product of the two binary variables Y₁ = Po+B₁D₁+P₂D2i + P3 (D₁¡ × D₂i) + Hi- The interaction term: O A. indicates the effect of being married on log earnings. B. does not make sense since it could be zero for married males. C. allows the population effect on log earnings of being married to depend on gender. D. cannot be estimated without the presence of a continuous variable.
Suppose we are interested in evaluating the impact on wages of being a college graduate and of residing in California. To this end we define the following dummy variables if college graduate if not college graduate coll = ncoll = if not college graduate if college graduate 1 cali = if residing in California S 1 if not residing in California ncali = if not residing in California if residing in California and for wages denoting yearly wages, we estimate the following model of returns to education wages = B1 coll+ B2ncoll + B3 cali + B4(coll x cali) + e where E[e|coll, cali] = 0. Which parameter or combination of parameters measures the increase in expected wages from obtaining a college degree (comparing to not having a college degree) when residing California? O a. None of the other options is correct O b. Bi – B2 O c. B1 – B2 + ß4 O d. B4 O e. Bi + B3 – ßi – B4 O f. Bi + B4 – ß2 – B4 Clear my choice
The question is the last bolded test. You need the previous questions to answer the last. Thank you for your time and help. You are the manager of a firm that sells CR2032 batteries for car key fobs and other electronic goods. You typically sell the fobs for $7 for a four-pack and sell an average of 27,192 four-packs per month. Due to increased labor costs, you decide to raise the price to $9 per four-pack. When you do this your monthly sales fall to 22,248 four-packs Assuming that your firm’s demand function is linear (i.e., takes the form ), calculate the linear demand function 22,248-27,192/9-7= -4944/2= -2472 Demand equation as 27,192 = a-2472(7) => a=27192+17304 =>a=44,496 27192= -2472x7+b 27192= -17304+b 27192+17304=44,496 Demand function is Q= -2472P+44,496 . Using the demand function that you estimated in the previous problem Calculate demand and total revenue when the price is $7 Q= -2472x7+44,496= -17,304+44,496= 27,192 Total revenue=PxQ=7x27,192=…
Consider the following panel model to examine the effect of retirement on consumption expenditure, consit, of individual i over years t=1,…,3: (B1) log⁡(consit) = β0 + β1retiredit + β2ageit + β3marriedit + β4healthit + δ1Yr2t + δ2Yr3t + ai + uit Where: retiredit is a dummy variable equal to 1 if individual i is retired on year t and 0 otherwise ageit is the individual's age in years marriedit is an indicator variable for whether the individual is married (1) or not (0) in year t healthit is an indicator variable equal to 1 if the individual is in 'good health' and 0 otherwise Yr2 is a dummy variable equal to 1 in year t=2 and 0 otherwise Yr3 is a dummy variable equal to 1 in year t=3 and 0 otherwise We obtain the following results when we estimate Model (B1) using RE and FE methods: Variable Random Effects Fixed Effects retired -0.072*** (0.024) -0.054** (0.025) age -0.008*** (0.003) - married 0.031*** (0.010) 0.028 (0.022) health 0.050*** (0.021) 0.052***…
The following equations have been estimated by Ordinary Least Squares (OLS), where Y denotes annual earnings, P job evaluation points, and the subscripts m and f denote male and female respectively: Ym = 5000 + 100Pm Yf = 4000 + 80Pf Assume the average job evaluation score was 300 points in male-dominated jobs and 200 points in female-dominated jobs. What is the average pay in male-dominated jobs and in female-dominated jobs? Use a Oaxaca decomposition to determine the average pay differential between male and female dominated jobs into two components: a portion attributable to the difference in job evaluation points (valued according to the male pay for such points) and a portion attributable to differences in pay for the same job evaluation points. Use that same decomposition, but this time evaluate the differences in job evaluation points according to the female pay for such points.
You are interested in the effect of income on health, where a linear regression will lead to classical selection bias. One option is to use the income of the neighborhood as an instrument of an individual’s income. Is this a good instrument? Explain.
What is the pre-requisite on the variables of a regression for a cointegration longrun relationship to exist?

SEE MORE QUESTIONS

Recommended textbooks for you

ENGR.ECONOMIC ANALYSIS

Economics

ISBN:

9780190931919

Author:

NEWNAN

Publisher:

Oxford University Press

Principles of Economics (12th Edition)

Economics

ISBN:

9780134078779

Author:

Karl E. Case, Ray C. Fair, Sharon E. Oster

Publisher:

PEARSON

Engineering Economy (17th Edition)

Economics

ISBN:

9780134870069

Author:

William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

Publisher:

PEARSON

ENGR.ECONOMIC ANALYSIS

Economics

ISBN:

9780190931919

Author:

NEWNAN

Publisher:

Oxford University Press

Principles of Economics (12th Edition)

Economics

ISBN:

9780134078779

Author:

Karl E. Case, Ray C. Fair, Sharon E. Oster

Publisher:

PEARSON

Engineering Economy (17th Edition)

Economics

ISBN:

9780134870069

Author:

William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

Publisher:

PEARSON

Principles of Economics (MindTap Course List)

Economics

ISBN:

9781305585126

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

Managerial Economics: A Problem Solving Approach

Economics

ISBN:

9781337106665

Author:

Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:

Cengage Learning

Managerial Economics & Business Strategy (Mcgraw-…

Economics

ISBN:

9781259290619

Author:

Michael Baye, Jeff Prince

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS