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a.) Using the confidence interval approach, state and explain whether the variable 'AGE' is statistically significant or not. Use 5% level of significance, which give 1.96 critical value.

a.) Using the confidence interval approach, state and explain whether the variable 'AGE' is statistically significant or not. Use 5% level of significance, which give 1.96 critical value.

Functions and Change: A Modeling Approach to College Algebra (MindTap Course List)
Functions and Change: A Modeling Approach to College Algebra (MindTap Course List)
6th Edition
ISBN:9781337111348
Author:Bruce Crauder, Benny Evans, Alan Noell
Publisher:Bruce Crauder, Benny Evans, Alan Noell
Chapter3: Straight Lines And Linear Functions
Section3.4: Linear Regression
Problem 8SBE
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QUESTION ONE The table below was extracted from Stata. It is an output of a regression that was conducted on EARNINGS in dollars (dependent variable), and the following as independent variables: AGE (years), S (years in school), MALE (dummy for male), LIBRARY, SIBLINGS (number of siblings), and ETHHISP (dummy for Hispanic respondents). Using the information in the table, answer the questions below: Source Model Residual Total EARNINGS AGE S MALE LIBRARY SIBLINGS ETHHISP cons SS 7454.91824 28115.9859 df 6 1242.48637 524 53.6564617 530 67.1149135 Coef. Std. Err. MS .3930994 .1467907 1.278186 .1407522 3.590323 .6458634 1.010765 .7641504 -.1085979 .1566326 -.404548 1.356467 -19.26833 5.088757 t Number of obs F (6, 524) Prob > F R-squared Adj R-squared Root MSE P>|t| 0.008 9.08 0.000 5.56 0.000 1.32 0.187 -0.69 0.488 -0.30 0.766 -3.79 0.000 531 23.16 0.0000 1.001678 2.321524 -.4904096 -.4163029 -3.069328 -29.2652 0.2005 7.3251 [95% Conf. Interval] 1.554694 4.859123 2.51194 .1991072 2.260233 -9.271462
Transcribed Image Text:QUESTION ONE The table below was extracted from Stata. It is an output of a regression that was conducted on EARNINGS in dollars (dependent variable), and the following as independent variables: AGE (years), S (years in school), MALE (dummy for male), LIBRARY, SIBLINGS (number of siblings), and ETHHISP (dummy for Hispanic respondents). Using the information in the table, answer the questions below: Source Model Residual Total EARNINGS AGE S MALE LIBRARY SIBLINGS ETHHISP cons SS 7454.91824 28115.9859 df 6 1242.48637 524 53.6564617 530 67.1149135 Coef. Std. Err. MS .3930994 .1467907 1.278186 .1407522 3.590323 .6458634 1.010765 .7641504 -.1085979 .1566326 -.404548 1.356467 -19.26833 5.088757 t Number of obs F (6, 524) Prob > F R-squared Adj R-squared Root MSE P>|t| 0.008 9.08 0.000 5.56 0.000 1.32 0.187 -0.69 0.488 -0.30 0.766 -3.79 0.000 531 23.16 0.0000 1.001678 2.321524 -.4904096 -.4163029 -3.069328 -29.2652 0.2005 7.3251 [95% Conf. Interval] 1.554694 4.859123 2.51194 .1991072 2.260233 -9.271462
a.) Using the confidence interval approach, state and explain whether the variable 'AGE' is statistically significant or not. Use 5% level of significance, which give 1.96 critical value. b.) Use data in the table to calculate the R-squared and comment on the size of the value. c.) A sample of 5000 people from Eastern Province found that they eat an average of 7 'Mbeba' (rabbits) with a variance of 400. Using both, the one-sided and the two-sided approach, test the hypothesis that the population average is 6 'Mbeba' (rabbits). Use either 95% or 99% confidence level. d.) It is argued that when using the R-squared (r²), there is a temptation to keep on increasing/adding the number of regressors. Using appropriate expressions, explain this argument and offer a remedy. e) Use the figure below to explain the Classical Linear Regression assumption of strict exogeneity.
Transcribed Image Text:a.) Using the confidence interval approach, state and explain whether the variable 'AGE' is statistically significant or not. Use 5% level of significance, which give 1.96 critical value. b.) Use data in the table to calculate the R-squared and comment on the size of the value. c.) A sample of 5000 people from Eastern Province found that they eat an average of 7 'Mbeba' (rabbits) with a variance of 400. Using both, the one-sided and the two-sided approach, test the hypothesis that the population average is 6 'Mbeba' (rabbits). Use either 95% or 99% confidence level. d.) It is argued that when using the R-squared (r²), there is a temptation to keep on increasing/adding the number of regressors. Using appropriate expressions, explain this argument and offer a remedy. e) Use the figure below to explain the Classical Linear Regression assumption of strict exogeneity.
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