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# ps2 - Problem Set 2 Introduction to Econometrics Fall 2006...

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Problem Set 2 Introduction to Econometrics - Fall 2006 Due Date: Thursday, October 5th, BEFORE CLASS. Each student is responsible for handing one handwritten solution. If working in groups, indicate the members of the group (to facilitate grading). PLEASE SHOW YOUR WORK . 1. A random sample of 400 ants is taken from an anthill and their length and speed are recorded. Length is measured in inches and speed in miles per hour. A regression of speed on length yields: \ speed = 1 . 1+4 . 28 length R 2 =0 . 92 SER =1 5 . 1 (a) Say that a speci f cantis 1 . 2 inches long. What is the regression speed prediction for it? What if it was 0 . 5 inches long? (b) If an ant grew by 3 inches, how much would its regression predicted speed increase? (c) Now, say that length was recorded in centimeters and speed in kilometers per hour. What are the regression estimates from this new regression? (Specify all estimated coe cients, R 2 and ) 1 2. A professor decides to run an experiment to measure the e f ect of time pressure on f nal exam scores. He gives each of the 400 students in his course the same f nal exam, but some students have 90 minutes to complete the exam while others have 120 minutes. Each student is randomly assigned one of the examination times based on the F ip of a coin. Let Y i denote the number of points scored on the exam by the i th student (0 Y i 100) ,let X i denote the amount of time that the student has to complete the exam ( X i =90 or 120) , and consider the regression Y i = β 0 + β 1 X i + u i . (a) Explain what the term u i represents. Why will di f erent students have di f erent values of u i ?

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ps2 - Problem Set 2 Introduction to Econometrics Fall 2006...

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