Hwk 1 - Fall 2010 - about the factors that affect the...

Info icon This preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Economics 230 Homework - 1 Z.Mukherjee Fall 2010 1. (a) Suppose that a random variable X takes the following values: -2, 0, 1, 3, 8 with the corresponding probabilities: 0.2, p, 0.1, 2p, 0.4. Calculate the expected value of X. (b) As you can see, the random variable X is a discrete random variable. If instead, you were asked to calculate the expected value of a continuous random variable, how would you do that? 2. Suppose next summer you will get a government job at Washington D.C. Your first assignment at your new job will require you to estimate the U.S. demand for cigarettes. You know from your principles of econ class that a consumer’s demand for any good depends on a number of factors. (a) Use your knowledge of basic microeconomics to come up with a model that you will estimate if you want to know about U.S. consumers’ demand for cigarettes. Write down your model and explain clearly what each term in the model implies. You must explain what variables you can observe (and can get data on) and what you plan to do
Image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: about the factors that affect the demand for cigarettes, but are either unobservable to the researcher or you cannot get the relevant data. (b) Suppose you actually had to run the regression and report the results to your boss. Explain in a few sentences how you would go about the job. What assumptions do you need to make about the unobservable factors such that your estimation results are meaningful and that the estimated coefficients show a casual effect of your exogenous variables on the dependent variable? 3. Suppose that at a large university, college grade point average, GPA, and SAT score, are related by the conditional expectation E(GPA|SAT) = 0.70+0.002 SAT. (a) What is the function E(GPA|SAT) = 0.70+0.002 SAT called if GPA is your dependent variable and SAT is your independent variable? (b) Find the expected GPA when SAT = 800. (c) Find E(GPA|SAT) = 0.70+0.002 SAT when SAT = 1100. (d) How would you interpret the difference in the results you obtained in (b) and (c)?...
View Full Document

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern