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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View Full DocumentPart 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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 Spring '09
 DAHL
 Econometrics, Linear Regression, Regression Analysis, rf

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