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The following model is used to investigate factors affecting the probability of smoking of adults: smokes = a + log(cigpric) + azlog(income) + ageduc + asgender + u, where smokes is a dummy variable equal to one if a person smokes, and zero otherwise, log(cigpric) is log of cigarette price, log(income) is log of income, educ refers to years of education of a person, and gender is a binary variable equal to one if a person is male, and zero otherwise. We estimate the model for a random sample of 5000 adults. Which of the following is correct about the estimated regression? Select one: O a. The dependent variable does not have a normal distribution and therefore you cannot use OLS to estimate the model. O b. The conditional variance of the error term is not constant and thus the F-test is invalid. O c. The error term is unlikely to have a normal distribution and thus you cannot use the t-test to test the following hypothesis Ho: a₁ = 0

The following model is used to investigate factors affecting the probability of smoking of adults: smokes = a + log(cigpric) + azlog(income) + ageduc + asgender + u, where smokes is a dummy variable equal to one if a person smokes, and zero otherwise, log(cigpric) is log of cigarette price, log(income) is log of income, educ refers to years of education of a person, and gender is a binary variable equal to one if a person is male, and zero otherwise. We estimate the model for a random sample of 5000 adults. Which of the following is correct about the estimated regression? Select one: O a. The dependent variable does not have a normal distribution and therefore you cannot use OLS to estimate the model. O b. The conditional variance of the error term is not constant and thus the F-test is invalid. O c. The error term is unlikely to have a normal distribution and thus you cannot use the t-test to test the following hypothesis Ho: a₁ = 0

Linear Algebra: A Modern Introduction
Linear Algebra: A Modern Introduction
4th Edition
ISBN:9781285463247
Author:David Poole
Publisher:David Poole
Chapter7: Distance And Approximation
Section7.3: Least Squares Approximation
Problem 31EQ
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The following model is used to investigate factors affecting the probability of smoking of adults: smokes = a + alog(cigpric) + a2log(income) +azeduc + asgender + u, where smokes is a dummy variable equal to one if a person smokes, and zero otherwise, log(cigpric) is log of cigarette price, log(income) is log of income, educ refers to years of education of a person, and gender is a binary variable equal to one if a person is male, and zero otherwise. We estimate the model for a random sample of 5000 adults. Which of the following is correct about the estimated regression? Select one: O a. The dependent variable does not have a normal distribution and therefore you cannot use OLS to estimate the model. O b. The conditional variance of the error term is not constant and thus the F-test is invalid. O c. The error term is unlikely to have a normal distribution and thus you cannot use the t-test to test the following hypothesis Ho: a₁ = 0 O d. None of the answers is correct.
Transcribed Image Text:The following model is used to investigate factors affecting the probability of smoking of adults: smokes = a + alog(cigpric) + a2log(income) +azeduc + asgender + u, where smokes is a dummy variable equal to one if a person smokes, and zero otherwise, log(cigpric) is log of cigarette price, log(income) is log of income, educ refers to years of education of a person, and gender is a binary variable equal to one if a person is male, and zero otherwise. We estimate the model for a random sample of 5000 adults. Which of the following is correct about the estimated regression? Select one: O a. The dependent variable does not have a normal distribution and therefore you cannot use OLS to estimate the model. O b. The conditional variance of the error term is not constant and thus the F-test is invalid. O c. The error term is unlikely to have a normal distribution and thus you cannot use the t-test to test the following hypothesis Ho: a₁ = 0 O d. None of the answers is correct.
Suppose you collect data from a survey on wages, education (educ), experience (exper), and race (white or not white). Which of the following model would best allow you to test whether the return to education depend on race? Select one: O a. log(wage) = Bo + Bieduc + B₂exper+ B3white + u O b. log(wage) = Bo + Bieduc* white + Brexper + B3exper² + u O c. log(wage) = Bo + Bieduc + Breduc* white + Bzexpеr + B₁еxper² + u O d. log(wage) = Bo + Bieduc + B₂white + Breduc* white + Berper + u
Transcribed Image Text:Suppose you collect data from a survey on wages, education (educ), experience (exper), and race (white or not white). Which of the following model would best allow you to test whether the return to education depend on race? Select one: O a. log(wage) = Bo + Bieduc + B₂exper+ B3white + u O b. log(wage) = Bo + Bieduc* white + Brexper + B3exper² + u O c. log(wage) = Bo + Bieduc + Breduc* white + Bzexpеr + B₁еxper² + u O d. log(wage) = Bo + Bieduc + B₂white + Breduc* white + Berper + u
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