Econ 210 Spring 2009 Problem Set 3

# Econ 210 Spring 2009 Problem Set 3 - Econ 210 Spring...

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Econ 210 Spring Quarter 2009 Problem Set 3 - Due Date: 4/20/2009 Solve the following problem. Show your work 1. TRUE/FALSE a. Uncorrelated Random variables are also independent b. The correlation between two random variables will always be between 0 and 1. c. ) where f(X) refers to the marginal probability distribution of X () 1 ,( N i i pxy fX = = 2. Assume the whole population can be divided into 3 occupations: Astronauts, Butchers and Craftsmen (No, there are no others). The mean wages for the three groups are \$40, \$90, \$220 respectively. 10% of all people are Astronauts, 40% are Butchers and 50% are Craftsmen. a. Calculate the mean wage for the whole population b. Assume you only know that 10% are Astronauts. Give the upper and lower bound on the population’s mean wage 3. Use the following table to calculate a) – d). Y 1 2 X 2 0.24 0.46 3 0.12 0.18 a) Find E(X) and E(Y) b) Find P(X=2|Y=1) c) Find E(X|Y=2) and E(X|Y=1) d) Use the Law of Iterated Expectations to show the E(Y)=E X [E(Y|X)] 4. Use the following table to calculate a) – d).

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## This note was uploaded on 09/25/2010 for the course ECON 210 taught by Professor Pavan during the Winter '09 term at Northwestern.

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Econ 210 Spring 2009 Problem Set 3 - Econ 210 Spring...

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