PS1--Answers

PS1--Answers - Econ 141: Problem Set 1: Answers Fall 2007...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Econ 141: Problem Set 1: Answers Fall 2007 1. You ask 1000 people in a neighborhood (the total population of the neighborhood) about their education and employment status. The responses can be divided up into the following four categories: Unemployed, Non-college grads : 42 people Employed, Non-college grads : 694 people Unemployed, College grads : 9 people Employed, College grads : 255 people You decide to define the random variable X as 0 if the person is not a college grad and 1 if the person is, and the random variable Y as 0 if the person is unemployed and 1 if employed. What is E[ X ]? E[ Y ]? What is E[ Y | X = 0]? E[ Y | X = 1]? Answer: E[ X ] = 0 * (42 + 694) / 1000 + 1 * (9 + 255) / 1000 = 263 / 1000 = . 263 E[ Y ] = 0 * (42 + 9) / 1000 + 1 * (694 + 255) / 1000 = 949 / 1000 = . 949 E[ Y | X = 0] = 0 * 42 / (42 + 694) + 1 * 694 / (42 + 694) = 694 / 736 = . 943 E[ Y | X = 1] = 0 * 9 / (9 + 255) + 1 * 255 / (9 + 255) = 255 / 264 = . 966 2. We think that stock prices react to expectations about the future regulatory environ-
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 3

PS1--Answers - Econ 141: Problem Set 1: Answers Fall 2007...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online