CHAPTER 1
SOLUTIONS TO PROBLEMS 1.1 It does not make sense to pose the question in terms of causality. Economists would assume that students choose a mix of studying and working (and other activities,
CHAPTER 16
SOLUTIONS TO PROBLEMS
16.1 (i) If 1 = 0 then y1 = 1z1 + u1, and so the right-hand-side depends only on the exogenous
variable z1 and the error term u1. This then is the reduced form for y1.
CHAPTER 17
SOLUTIONS TO PROBLEMS
17.1 (i) Let m0 denote the number (not the percent) correctly predicted when yi = 0 (so the
prediction is also zero) and let m1 be the number correctly predicted when
CHAPTER 18
SOLUTIONS TO PROBLEMS
18.1 With zt1 and zt2 now in the model, we should use one lag each as instrumental variables, zt-1,1
and zt-1,2. This gives one overidentifying restriction that can be
SNU Division of Economics
Industrial Organization
Professor Sang-Seung Yi
Spring 2001
Midterm Examination
Suggested Answers
1. Two firms compete in the market. Each firm can produce at a unit cost 6.
Industrial Organization
Midterm Examination, Spring 2004
SNU School of Economics, Professor Sang-Seung Yi
1. What is the definition of derivative action? What is the target of a securities class
actio
Industrial Organization
Midterm Examination, Spring 2006
SNU School of Economics, Professor Sang-Seung Yi
Suggested Answers
1. In association with agency problem of a company, summarize the case of Hw
Industrial Organization
Midterm Examination, Spring 2005
SNU School of Economics, Professor Sang-Seung Yi
1. Explain briefly cumulative voting and derivative suits implemented to improve
corporate gov
Industrial Organization
Solution of Midterm Examination, Spring 2014
SNU Department of Economics,
Professor Sang-Seung Yi
1.
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Industrial Organization
Midterm Examination, spring 2008
SNU School of Economics, Professor Sang-Seung Yi
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CHAPTER 14
SOLUTIONS TO PROBLEMS
14.1 First, for each t > 1, Var(uit) = Var(uit ui,t-1) = Var(uit) + Var(ui,t-1) = 2 u2 , where we use
the assumptions of no serial correlation in cfw_ut and constant v
CHAPTER 15
SOLUTIONS TO PROBLEMS
15.1 (i) It has been fairly well established that socioeconomic status affects student performance.
The error term u contains, among other things, family income, which
CHAPTER 13
SOLUTIONS TO PROBLEMS
13.1 Without changes in the averages of any explanatory variables, the average fertility rate fell
by .545 between 1972 and 1984; this is simply the coefficient on y84
CHAPTER 2
SOLUTIONS TO PROBLEMS 2.2 (i) Let yi = GPAi, xi = ACTi, and n = 8. Then x = 25.875, y = 3.2125, (xi x )(yi y ) =
i =1 n
5.8125, and (xi x )2 = 56.875. From equation (2.9), we obtain the slo
CHAPTER 3
SOLUTIONS TO PROBLEMS 3.2 (i) hsperc is defined so that the smaller it is, the lower the students standing in high school. Everything else equal, the worse the students standing in high scho
CHAPTER 5
SOLUTIONS TO PROBLEMS 5.2 The variable cigs has nothing close to a normal distribution in the population. Most people do not smoke, so cigs = 0 for over half of the population. A normally di
CHAPTER 4
SOLUTIONS TO PROBLEMS 4.2 (i) and (iii) generally cause the t statistics not to have a t distribution under H0. Homoskedasticity is one of the CLM assumptions. An important omitted variable
CHAPTER 7
SOLUTIONS TO PROBLEMS 7.1 (i) The coefficient on male is 87.75, so a man is estimated to sleep almost one and one-half hours more per week than a comparable woman. Further, tmale = 87.75/34.
CHAPTER 6
SOLUTIONS TO PROBLEMS 6.1 This would make little sense. Performances on math and science exams are measures of outputs of the educational process, and we would like to know how various educa
CHAPTER 8
SOLUTIONS TO PROBLEMS 8.1 Parts (ii) and (iii). The homoskedasticity assumption played no role in Chapter 5 in showing that OLS is consistent. But we know that heteroskedasticity causes stat
CHAPTER 10
SOLUTIONS TO PROBLEMS 10.1 (i) Disagree. Most time series processes are correlated over time, and many of them strongly correlated. This means they cannot be independent across observations
CHAPTER 9
SOLUTIONS TO PROBLEMS 9.1 There is functional form misspecification if 6 0 or 7 0, where these are the population parameters on ceoten2 and comten2, respectively. Therefore, we test the join
CHAPTER 11
SOLUTIONS TO PROBLEMS 11.1 Because of covariance stationarity, 0 = Var(xt) does not depend on t, so sd(xt+h) =
0 for
any h 0. By definition, Corr(xt,xt+h) = Cov(xt,xt+h)/[sd(xt) sd(xt+h)]
CHAPTER 12
SOLUTIONS TO PROBLEMS
12.1 We can reason this from equation (12.4) because the usual OLS standard error is an
estimate of / SSTx . When the dependent and independent variables are in level
Industrial Organization
Midterm Examination, Spring 2004
SNU School of Economics, Professor Sang-Seung Yi
1. (derivative action) ?
(securities class action) ?
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