C4 In Example 4.9, the restricted version of the model can be estimated using all 1,388 observations in the sample. Compute the R-squared from the regression of bwght on cigs, parity, and faminc using all observations. Compare this to the R-squared reported for the restricted model in Example 4.9. C5 Use the data in MLB1 for this exercise. (i) (ii) Use the model estimated in equation (4.31) and drop the variable rbisyr. What happens to the statistical significance of hrunsyr? What about the size of the coefficient on hrunsyr? Add the variables runsyr (runs per year), fldperc (fielding percentage), and sbasesyr (stolen bases per year) to the model from part (i). Which of these factors are individually significant? (iii) In the model from part (ii), test the joint significance of bavg, fldperc, and sbasesyr. C6 Use the data in WAGE2 for this exercise. (i) Consider the standard wage equation (ii) log(wage) Bo + B₁educ + B₂exper + Batenure + u. State the null hypothesis that another year of general workforce experience has the same effect on log(wage) as another year of tenure with the current employer. Test the null hypothesis in part (i) against a two-sided alternative, at the 5% significance level, by constructing a 95% confidence interval. What do you conclude? C7 Refer to the example used in Section 4-4. You will use the data set TWOYEAR. (i) The variable phsrank is the person's high school percentile. (A higher number is better. For example, 90 means you are ranked better than 90 percent of your graduating class.) Find the smallest, largest, and average phsrank in the sample. (ii) Add phsrank to equation (4.26) and report the OLS estimates in the usual form. Is phsrank statistically significant? How much is 10 percentage points of high school rank worth in terms of wage? (iii) Does adding phsrank to (4.26) substantively change the conclusions on the returns to two- and four-year colleges? Explain. In T (iv) The data set contains a variable called id. Explain why if you add id to equation (4.17) or (4.26) you expect it to be statistically insignificant. What is the two-sided p-value? C8 The data set 401KSUBS contains information on net financial wealth (nettfa), age of the survey respondent (age), annual family income (inc), family size (fsize), and participation in certain pension plans for people in the United States. The wealth and income variables are both recorded in thousands of dollars. For this question, use only the data for single-person households (so fsize = 1).

C4 In Example 4.9, the restricted version of the model can be estimated using all 1,388 observations in the sample. Compute the R-squared from the regression of bwght on cigs, parity, and faminc using all observations. Compare this to the R-squared reported for the restricted model in Example 4.9. C5 Use the data in MLB1 for this exercise. (i) (ii) Use the model estimated in equation (4.31) and drop the variable rbisyr. What happens to the statistical significance of hrunsyr? What about the size of the coefficient on hrunsyr? Add the variables runsyr (runs per year), fldperc (fielding percentage), and sbasesyr (stolen bases per year) to the model from part (i). Which of these factors are individually significant? (iii) In the model from part (ii), test the joint significance of bavg, fldperc, and sbasesyr. C6 Use the data in WAGE2 for this exercise. (i) Consider the standard wage equation (ii) log(wage) Bo + B₁educ + B₂exper + Batenure + u. State the null hypothesis that another year of general workforce experience has the same effect on log(wage) as another year of tenure with the current employer. Test the null hypothesis in part (i) against a two-sided alternative, at the 5% significance level, by constructing a 95% confidence interval. What do you conclude? C7 Refer to the example used in Section 4-4. You will use the data set TWOYEAR. (i) The variable phsrank is the person's high school percentile. (A higher number is better. For example, 90 means you are ranked better than 90 percent of your graduating class.) Find the smallest, largest, and average phsrank in the sample. (ii) Add phsrank to equation (4.26) and report the OLS estimates in the usual form. Is phsrank statistically significant? How much is 10 percentage points of high school rank worth in terms of wage? (iii) Does adding phsrank to (4.26) substantively change the conclusions on the returns to two- and four-year colleges? Explain. In T (iv) The data set contains a variable called id. Explain why if you add id to equation (4.17) or (4.26) you expect it to be statistically insignificant. What is the two-sided p-value? C8 The data set 401KSUBS contains information on net financial wealth (nettfa), age of the survey respondent (age), annual family income (inc), family size (fsize), and participation in certain pension plans for people in the United States. The wealth and income variables are both recorded in thousands of dollars. For this question, use only the data for single-person households (so fsize = 1).

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter4A: Problems In Applying The Linear Regression Model

Section: Chapter Questions

Problem 2E

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