Problem Set 2

Due Tuesday 09/23/08
Econ 321  Applied Econometrics
Fall 2008
Cornell University
Prof. Molinari
5 which I replaced with a new question because that semester I covered di/erent material. As
you will see, the exam consisted of THREE parts totaling 100 points. I will maintain the same
structure for the Test 1 that I am preparing for your class. The exam will be a CLOSED BOOK
graphic calculators are prohibited. You have 75 minutes
to complete the exam. SHOW ALL your
work as partial credit will be given.
Answers without explanations might NOT be given (full)
credit even if they are correct. THINK before you answer, and GOOD LUCK!
Part 1
25 points (5 points each)
In
WORDS
, brie±y
(1 paragraph maximum) describe the following:
1. Sample Space.
2. Independent Events.
3. Covariance.
4. Expected Value.
5. Bayes Theorem.
1
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20 points (Each subquestion has the number of corresponding points in brackets)
1. Scott Resnick, a former MSU undergraduate, collected data PNTSPRD from various news
seasons. Here is a summary of his data:
Var
Label
Mean
Std
favscr
78.13
13.52
undscr
68.59
11.91
favhome
= 1 if favored team plays at home
0.68
0.47
favwin
= 1 if favored team wins
0.76
0.43
Scott wants to know whether the event ±favored team plays at home²and the event ±favored
question:
Var
Mean
Std
favscr*favhome
53.65
38.69
favhome*favwin
0.64
0.50
(10 points)
2. The dataset vote1 contains the following variables:
Var
Label
Mean
Std
voteA
% vote for A
50.50
16.78
democA
= 1 if A is democrat
0.555
0.498
expendA
campaign expends.
by A, $1000s
310.61
280.99
expendB
campaign expends.
by B, $1000s
305.09
306.28
AA
voteA*expendA
17539.59
15977.73
AB
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 Fall '08
 MOLINARI
 Econometrics, Probability distribution, Probability theory, probability density function, Applied Econometrics Cornell

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