s07pre2

# s07pre2 - CORNELL UNIVERSITY Economics 321 Applied...

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CORNELL UNIVERSITY Economics 321: Applied Econometrics Spring 2007 G. Jakubson PRELIMINARY EXAM #2 This is a closed book exam. You are permitted to have a calculator, the formula sheet and tables distributed with the exam and your copies of two handouts: "Sample <=> Population Analogies" and "Confidence Intervals for the Mean" 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. As it says on the cover of The Hitchhiker's Guide to the Galaxy , DON'T PANIC ! If you get stuck on a problem, skip it and move on. 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 75 minutes to complete the twelve (12) questions on the exam. There are 300 regular credit points possible. Good Luck ! 1. (10 points, 5 each part) The World Bank is financing an economic development program in Econoland. Econoland has some wealthy counties and some poor ones. Not all poor counties are participating in the program – assume that participation in the program is random from the group of poor counties, and that no wealthy counties participate in the program. Suppose that, in the population, 70% of the counties are wealthy and 30% are not. Of those counties which are poor, 40% participate in the program. a. What is the probability that a randomly chosen county is a participant? Wealthy counties have a per capita income of 800. Poor counties which are not in the program have a per capita income of 450, and overall the average per capita income across counties is 700. b. What is the average per capita income for participating counties? 2. (15 points, 5 each part) For the population in question 1, a. What is the variance of average per capita income among all three groups of counties? (Do not evaluate the expression, but do show the numerical values in the formula.) b. What is the mean per capita income among poor counties? Economics 321, Applied Econometrics Page 1 of 5 Prelim 2, Spring 2007 c:\. ..\s07pre2.doc

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c. What is the variance of per capita income among poor counties? (Do not evaluate the expression, but do show the numerical values in the formula.) 3. (35 points) Policymakers at the World Bank are debating the issue of whether or not to continue funding the program. The debate concerns the effectiveness of the program. David Harleyson asks experts to compare the mean per capita incomes for participating counties and for non-participants. a.
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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.

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s07pre2 - CORNELL UNIVERSITY Economics 321 Applied...

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