Wooldridge IE AISE SSM ch03 - CHAPTER 3 SOLUTIONS TO...

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This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. This may not be resold, copied, or distributed without the prior consent of the publisher. 9 CHAPTER 3 SOLUTIONS TO PROBLEMS 3.2 (i) hsperc is defined so that the smaller it is, the lower the student’s standing in high school. Everything else equal, the worse the student’s standing in high school, the lower is his/her expected college GPA. (ii) Just plug these values into the equation: n colgpa = 1.392 .0135(20) + .00148(1050) = 2.676. (iii) The difference between A and B is simply 140 times the coefficient on sat , because hsperc is the same for both students. So A is predicted to have a score .00148(140) .207 higher. (iv) With hsperc fixed, n colgpa Δ = .00148 Δ sat . Now, we want to find Δ sat such that n colgpa Δ = .5, so .5 = .00148( Δ sat ) or Δ sat = .5/(.00148) 338. Perhaps not surprisingly, a large ceteris paribus difference in SAT score – almost two and one-half standard deviations – is needed to obtain a predicted difference in college GPA or a half a point. 3.4 (i) If adults trade off sleep for work, more work implies less sleep (other things equal), so 1 β < 0. (ii) The signs of 2 and 3 are not obvious, at least to me. One could argue that more educated people like to get more out of life, and so, other things equal, they sleep less ( 2 < 0). The relationship between sleeping and age is more complicated than this model suggests, and economists are not in the best position to judge such things. (iii) Since totwrk is in minutes, we must convert five hours into minutes: Δ totwrk = 5(60) = 300. Then sleep is predicted to fall by .148(300) = 44.4 minutes. For a week, 45 minutes less sleep is not an overwhelming change. (iv) More education implies less predicted time sleeping, but the effect is quite small. If we assume the difference between college and high school is four years, the college graduate sleeps about 45 minutes less per week, other things equal. (v) Not surprisingly, the three explanatory variables explain only about 11.3% of the variation in sleep . One important factor in the error term is general health. Another is marital status, and whether the person has children. Health (however we measure that), marital status, and number and ages of children would generally be correlated with totwrk . (For example, less healthy people would tend to work less.)
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This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. This may not be resold, copied, or distributed without the prior consent of the publisher. 10 3.6 (i) No. By definition, study + sleep + work + leisure = 168. Therefore, if we change study , we must change at least one of the other categories so that the sum is still 168. (ii) From part (i), we can write, say, study as a perfect linear function of the other independent variables: study = 168 sleep work leisure . This holds for every observation, so MLR.3 violated.
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Wooldridge IE AISE SSM ch03 - CHAPTER 3 SOLUTIONS TO...

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