ECON 3210 3.0 Section A  Fall 2011
Assignment 1
(Due Date: September 28, 2011)
Question 1:
Let
X
be a random variable with mean
μ
x
and variance
σ
2
x
. Also let
Y
=
a
+
bX
where
a
and
b
are known constants. Show that
a.
μ
y
=
a
+
bμ
x
.
b.
σ
2
y
=
b
2
σ
2
x
.
Question 2:
Let
grthemp
denote the proportionate growth in employment (in percentage),
at the country level, from 1990 to 1995, and let
salestax
denote the country sales tax rate
(in percentage). The ﬁnance minister of the country reported that
grthemp
= 0
.
043

0
.
78
salestax.
Interpret the intercept and slope in the equation.
Question 3:
The Human Resources Director of the Econometrics Coroperation told their
Section Managers that they use the following formula to calculate salary of their employees.
log(
salary
) = 3
.
8 + 0
.
03
experience
where
salary
is the annual salary and
experience
is the number of previous years of relevant
experience.
a. What is the starting salary for Tom, who joined the company with no previous work
This preview has intentionally blurred sections. Sign up to view the full version.
View Full Document
This is the end of the preview.
Sign up
to
access the rest of the document.
 Spring '11
 A
 Normal Distribution, Standard Deviation, Probability theory, human resources director, Phillies, compact discs

Click to edit the document details