talus on earnings.
0 know the effect of marital s
Omitted Variabb Exampie 1. Suppose we want t
Bias SALARY, = 30+ {3,MARRIED; + Ui
occurs When g
E Could AGE cause an om'med variable bias in the above regression?
. the e f, (Ag Judy in}!
vanabie us conei
AY = AAX
B1 is the expected change
in Y per one unit change in
X.
If X increases by 1 unit of
X, Y is expected to
increase by [31 units of Y.
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Barman-Quinn criteria: (HQC) t 1
Problem Set 2 - Answers
1. Suppose that there are two firms, X and Y. The return on investing in firm X is a random
variable X and the return on investing in firm Y is a random variable Y. The join probability
distribution of X and Y is as follows:
X\Y
12
Problem Set 3
2. One important aspect of quality control in a manufacturing process is monitoring the amount of a
product being packaged. For instance, the amount of coffee in an eight-ounce jar of coffee is a normal
random variable, with mean 8.00 ounces
Midterm Exam I - Answers
Eco 243
Fall 2011
1. (15 points) The following table describes the joint probability distribution of returns on mutual
fund A and mutual fund B.
B\A
5%
10%
6%
0.2
0.3
8%
0.2
0.3
Answer the following questions:
a. What is the proba
Midterm II-Answers
Econ 243
Fall 2011
1. (60 points) Consider the following data over 1000 individuals from the 2006 General Social
Survey:
partyid - political views measured on a scale from 0 to 6, (0 indicating strong Democrat, 1 Democrat, 2 independen
Midterm Exam I - Answers
Eco 243
Fall 2012
1. (30 points) Suppose that you run an online store. Let random variable Y take on value 1 if
an online visitor makes a purchase and 0 otherwise. Random variable X takes on value 1 if a
visitor uses PC and 0 if h
Midterm Exam II - Answers
Eco 243
Fall 2012
1. (35 points) A researcher used data on 200 movies to determine what drives box oce revenue.
He collected data on the following variables:
box_office - the box oce revenue for the movie (in millions of dollars