# s04fin1 - CORNELL UNIVERSITY Economics 321: Applied...

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CORNELL UNIVERSITY Economics 321: Applied Econometrics Spring 2004 G. Jakubson FINAL EXAM This is a closed book exam. You are permitted to have a calculator. In addition, you may use the supplementary materials that were distributed with the exam. Answer the questions below in an exam book or books. SHOW YOUR WORK ! Be sure to label each answer, and each part of each answer, clearly. Neatness counts -- if I cannot read it I cannot give you credit. Before you leave you must sign the sign-in sheet and note how many blue books you are turning in. Failure to do so may result in failing this exam. As it says on the cover of The Hitchhiker's Guide to the Galaxy , D O N ' T P A N I C ! If you get stuck on a particular problem, skip it and move on to the next one. If you cannot remember exactly how to answer a question, you may get partial credit for setting it up even if you don't solve it. Read the questions carefully. Note that questions have different weights, and parts within a question may not be weighted equally. You have 150 minutes to complete the eleven (11) questions on the exam. There are 450 points possible. Unless otherwise specified , hypothesis tests are two-tailed and to be done at the 5% level of significance. Do <Part I: Questions 1-5> and <Part II: Questions 6-11> in SEPARATE (sets of) BLUEBOOKS Good Luck ! Part I: Do Questions 1-5 in the SAME (set of) BLUEBOOK(s) 1. (140 points) In an attempt to increase the productivity of peasant farmers, the nobles instituted a training program. Ever frugal, they wished to judge its effectiveness before deciding whether to continue it. In particular, consider the program evaluation problem for the following training program: Training is made available to the 25% of the workforce with the lowest productivity. Of those workers who are eligible, 60% participate in the training program. Economics 321, Applied Econometrics Page 1 of 10 Final Exam, Spring 2004 c:\…\s04fin1.doc

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a. (5) What is the probability that a randomly chosen peasant participates in the training? Classify workers as low/high productivity and as trainee/nontrainee based on the previous year (the year in which the training took place). In the year after the training program, the average output for high workers (the top 75% of the distribution) is 18 bushels of grain per hour, and for the low nontrainees it is 12 per hour. The average output in the population of workers is 16.95 bushels per hour. b. (10) What is the average output rate for trainees? c. (10) What is the mean output rate among low productivity workers? In the House of Lords there is a debate about whether or not to continue funding the training program. They decide that they wish to know the effectiveness of the program. The famous Baron of Grey Matter calls the Royal Econometrician and asks her (this was a very progressive land for the time!!) to compare the mean output rates of trainees and nontrainees.
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## This note was uploaded on 05/26/2008 for the course ECON 3210 taught by Professor Molinari during the Spring '07 term at Cornell University (Engineering School).

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s04fin1 - CORNELL UNIVERSITY Economics 321: Applied...

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