examf06_answersja

examf06_answersja - Suggested Solutions 1. (a) The...

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Unformatted text preview: Suggested Solutions 1. (a) The interpretation of the coefficient on the dummy term, 2 is the reduction in the number of labor hours due to a highly rated management when log( X i ) = 0. It is the effect of good management on the regression intercept. (b) The coefficient of the coefficient 3 , the interaction term is, the effect of good management on the slope coefficient relating asset size to labor hours. (c) The fact that we care about does not reduce the effect hints that were interested in testing H : 3 0, with an alternative H 1 : 3 < 0. The test statistic is given by t * = 3- 3 se ( 3 ) t n- k- 1 under H . Substituting, we get t * = 3- 3 se ( 3 ) =- . 10 . 02 =- 5, and we reject if t * <- t . 05 n- k- 1 In this case t . 05 28- 3- 1 =- 1 . 71 hence the null is rejected, leading to conclude that good management decreases the examination hours. (d) 1 [ 1- se ( 1 ) t ( . 025) 24 , 1 + se ( 1 ) t ( . 025) 24 ], or in numbers, [0.35-(2.06)(0.05), 0.35+(2.06)(0.05)]. 2. (a) The critical assumptions to ensure existence is no perfect collinearity. The estimator is given by 2 = n i =1 r 2 i y i n i =1 r 2 i 2 ....
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examf06_answersja - Suggested Solutions 1. (a) The...

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