Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Chapter 36, Problem 3.1P
To determine
The statistically significant survey.
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A U.S. emergency relief agency is considering sending a team of experts to another country to treat a severely contagious disease outbreak. Each team costs $100,000 for this one-week-long job. The agency estimates effectiveness as follows:
0 teams = 1000 deaths;1 team = 500 deaths;2 teams = 250 deaths,3 teams = 50 deaths;4 teams = 50 deaths
Number of Teams
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2
250
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4
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If the Agency is considering sending 3 teams vs. 2 teams, what is the marginal cost (in dollar terms) of sending the third team? If saving a life is valued at $200,000 then the optimal number of teams to send is _____.
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Problem 3 (Wooldridge 15.8):
Suppose you want to test whether girls who attend a girls' high school do better in math than girls
who attend co-ed (mixed-gender) schools. You have a random sample of senior high school girls
from a state in the United States. Let score be the score on a standardized math test. Let girlhs
be a dummy variable indicating whether a student attends a girls' high school.
1. What other factors would you control for in the equation? (You should be able to reasonably
collect data on the factors you mention.)
2. Write an equation relating score to girlhs and the other factors you listed in part (1).
3. Suppose that parental moral support and motivation are unmeasured factors in the error term
in part (2). Are these likely to be correlated with girlhs? Explain what are the problems that
this creates in your model.
4. Discuss the assumptions needed for the number of girls' high schools within a 20-mile radius
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Chapter 36 Solutions
Principles of Economics (12th Edition)
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