Econometrics (ECO 721)
Name:
Practice First Exam
Partha Deb
Answer every question. Keep your answers brief and to the point. If you need only one
sentence to answer the question and explain your reasons, that is adequate. On the other
hand, if you write a onepage essay but fail to answer the question, you will receive little or
no credit. All your work, including scratch work should be done on these pages only. Use
the reverse side of the page if you need additional space. If you are at all unsure about any
question, please feel free to ask me. Good luck.
1
. Consider the following baseline regression for the demand for medical care, estimated on
a sample of 3000 individuals,
log(
medex
i
) =
&
0
+
1
age
i
+
2
age
2
i
+
3
f
i
+
4
f
i
age
i
+
5
f
i
age
2
i
+
6
log(
price
i
)+
7
log(
inc
i
)+
u
i
;
where
medex
i
is the annual expenditure on medical care by person
i
,
age
i
age in years,
f
i
is a dummy variable for female gender (=1 if female),
price
i
is the price of
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 Spring '09
 Partha
 Statistics, Econometrics, Regression Analysis, medical care, Errors and residuals in statistics, high school diploma

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