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Unformatted text preview: Answers to Review Questions Chapter 8 8. 3 (a) The regression functions for hypothetical values of the regression coefficients that are consistent with the educators statement are: 1 and 2 0. < When TestScore is plotted against STR the regression will show three horizontal segments. The first segment will be for values of STR 20; < the next segment for 20 25; STR the final segment for 25. STR The first segment will be higher than the second, and the second segment will be higher than the third. (b)It happens because of perfect multicollinearity. With all three class size binary variables included in the regression, it is impossible to compute the OLS estimates because the intercept is a perfect linear function of the three class size regressors. 8.4. (a) With 2 years of experience, the mans expected AHE is 2 ln( ) (0.0899 16) (0.521 0) (0.0207 0 16) (0.232 2) 0.000368 2 ) (0.058 0) (0.078 0) (0.030 1) 1.215 2.578 =  + +     + = AHE With 3 years of experience, the mans expected AHE is 2 ln( ) (0.0899 16) (0.521 0) (0.0207 0 16) (0.232 3) (0.000368 3 ) (0.058 0) (0.078 0) (0.030 1) 1.215 2.600 =  + +     + = AHE Difference = 2.600  2.578 = 0.022 (or 2.2%) (b)With 10 years of experience, the mans expected AHE is 2 ln( ) (0.0899 16) (0.521 0) (0.0207 0 16) (0.232 10) (0.000368 10 ) (0.058 0) (0.078 0) (0.030 1) 1.215 2.729 =  + +     + = AHE With 11 years of experience, the mans expected AHE is 2 ln( ) (0.0899 16) (0.521 0) (0.0207 0 16) (0.232 11) (0.000368 11 ) (0.058 0) (0.078 0) (0.030 1) 1.215 2.744 =  + +     + = AHE Difference = 2.744  2.729 = 0.015 (or 1.5%) (c) The regression in nonlinear in experience (it includes Potential experience 2 )....
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 Spring '10
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