PS 3 - solutions

# PS 3 - solutions - ECON 120B Homework 3 Troy Kravitz...

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ECON 120B: Homework 3 Troy Kravitz February 3, 2009 Exercise 4.3 Part A The coeﬃcient 9.6 shows the marginal eﬀect of Age on AWE; that is, AWE is expected to increase by \$9.6 for each additional year of age. 696.7 is the intercept of the regression line. It determines the overall level of the line. Part B SER is in the same units as the dependent variable (Y, or AWE in this example). Thus SER is measured in dollars per week. Part C R 2 is unit free. Part D Part i 696 . 7 + 9 . 6 × 25 = \$936 . 7 Part ii 696 . 7 + 9 . 6 × 45 = \$1 , 128 . 7 1

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Part E No. The oldest worker in the sample is 65 years old. 99 years is far outside the range of the sample data. Part F No. The distribution of earning is positively skewed and has kurtosis larger than the normal. Part G ˆ β 0 = ¯ Y - ˆ β 1 ¯ X , so that ¯ Y = ˆ β 0 + ˆ β 1 ¯ X . Thus the sample mean of AWE is 696 . 7 + 9 . 6 × 41 . 6 = \$1 , 096 . 06. Exercise 4.4
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PS 3 - solutions - ECON 120B Homework 3 Troy Kravitz...

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