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Econ120BCh7 - Chapter 7 Answers 7.1 7.2 7.3 7.4 7.5 7.6 7.7...

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Chapter 7 Answers 7.1, 7.2, 7.3, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9, 7.10 1. Regressor (1) (2) (3) College ( X 1 ) 5.46** (0.21) 5.48** (0.21) 5.44** (0.21) Female ( X 2 ) 2.64** (0.20) 2.62** (0.20) 2.62** (0.20) Age ( X 3 ) 0.29** (0.04) 0.29** (0.04) Ntheast ( X 4 ) 0.69* (0.30) Midwest ( X 5 ) 0.60* (0.28) South ( X 6 ) 0.27 (0.26) Intercept 12.69** (0.14) 4.40** (1.05) 3.75** (1.06) 2. (a) The t -statistic is 5.46/0.21 26.0 > 1.96, so the coefficient is statistically significant at the 5% level. The 95% confidence interval is 5.46 1.96 0.21. (b) t -statistic is 2.64/0.20 13.2, and 13.2 1.96, so the coefficient is statistically significant at the 5% level. The 95% confidence interval is 2.64 1.96 0.20. 3. (a) Yes, age is an important determinant of earnings. Using a t -test, the t -statistic is 0.29 0.04 7.25, with a p -value of 4.2 10 13 , implying that the coefficient on age is statistically significant at the 1% level. The 95% confidence interval is 0.29 1.96 0.04. (b) Age [0.29 1.96 0.04] 5 [0.29 1.96 0.04] 1.45 1.96 0.20 $1.06 to $1.84 4. (a) The F -statistic testing the coefficients on the regional regressors are zero is 6.10. The 1% critical value (from the 3, F distribution) is 3.78. Because 6.10 > 3.78, the regional effects are significant at the 1% level. (b) The expected difference between Juanita and Molly is ( X 6,Juanita X 6,Molly ) 6 6 . Thus a 95% confidence interval is 0.27 1.96 0.26.
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