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Econ 104 PS6 Solutions(1)

# Econ 104 PS6 Solutions(1) - Economics 104 PS6 Solutions...

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Economics 104 PS6 Solutions Molin Zhong November 16, 2011 1 Problem 8.10 1.1 Part A Δ y = β 0 + β 1 ( x 1 x 1 )+ β 2 x 2 + β 3 ( x 1 x 1 ) x 2 - ( β 0 + β 1 x 1 + β 2 x 2 + β 3 x 1 x 2 ) Δ y = β 1 Δ x 1 + β 3 Δ x 1 x 2 Δ y Δ x 1 = β 1 + β 3 x 2 1.2 Part B Δ y = β 0 + β 1 x 1 + β 2 ( x 2 x 2 )+ β 3 ( x 1 ( x 2 x 2 )) - ( β 0 + β 1 x 1 + β 2 x 2 + β 3 x 1 x 2 ) = β 2 Δ x 2 + β 3 x 1 Δ x 2 Δ y Δ x 2 = β 2 + β 3 x 1 1.3 Part C Δ y = β 0 + β 1 ( x 1 x 1 )+ β 2 ( x 2 x 2 )+ β 3 (( x 1 x 1 )( x 2 x 2 )) - ( β 0 + β 1 x 1 + β 2 x 2 + β 3 x 1 x 2 ) = ( β 1 + β 3 x 2 x 1 + ( β 2 + β 3 x 1 x 2 + β 3 Δ x 1 Δ x 2 2 Problem E8.2 2.1 Part A Here is the output from the regression: 1

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2.2 Part B Here is the output from the regression: Because the t-statistics are not significant at the 95 % level for age squared, there is no evidence that age has any nonlinear effect on beauty when controlling for other factors. Taking an F-test jointly testing age and age squared being equal to 0: F = 0 . 63 < 2 . 30. Hence, the variables are not jointly significant at the 10 % level.
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Econ 104 PS6 Solutions(1) - Economics 104 PS6 Solutions...

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