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Midterm_S06_Ftest_question_v2

Midterm_S06_Ftest_question_v2 - 5 You are conducting an...

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5 . You are conducting an empirical investigation into the beer expenditures of male and female office employees of a company. You have assembled for this project a random sample of observations on 40 office employees, 21 of whom are females and 19 of whom are males. The sample data provide observations on the following observable variables: i BE = the annual beer expenditures of employee i, measured in dollars per year; i INC = the annual income of employee i, in thousands of dollars per year; i AGE = the age of employee i, in years; i F = a female indicator variable, defined such that i F = 1 if employee i is female and i F = 0 if employee i is male. The beer expenditure equation for female employees can be written as: fi i 3 i 2 1 i u AGE INC BE + α + α + α = (1a) where the α j (j = 1, 2, 3) are the female regression coefficients. The beer expenditure equation for male employees can be written as: mi i 3 i 2 1 i u AGE INC BE + β + β + β = (1b) where the β j (j = 1, 2, 3) are the male regression coefficients.

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Midterm_S06_Ftest_question_v2 - 5 You are conducting an...

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