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(GPASAT) = 0.70+0.002 SAT. (a) What is the function E(GPASAT) = 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(GPASAT) = 0.70+0.002 SAT when SAT = 1100. (d) How would you interpret the difference in the results you obtained in (b) and (c)?...
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 Spring '10
 PM
 Economics, Econometrics, Probability theory

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