1. Suppose you want to know if higher height implies higher earnings and you need to run the following liner regression. Use Gretl to run the regression for you and obtain the estimated value for ?0and?1

earnings=?0+?1Height+u

2. Now use your regression result to test the following hypothesis at the 5% significance level:

H0?1=900

H1?1?900

To answer the question, you need to calculate the t-statistics using this formula tstatistics=estimatedvalue?hypothesizedvaluestandarderror, and then you will determine whether you will reject or fail to reject the null hypothesis at the 5% significance level.

sex age Tire educ cworker egion race earnings height 54 1 14 6 4 23362,87 71 26 16 1 38925,34 55 12 49430,11 73 6 18168,84 71 12 2 84054,75 72 13 1 33712,97 69 12 1 33712,97 70 12 1 18168,84 70 1 23362,87 70 84054,75 74 49430,11 69 84054,75 66 INAWWW. 2 28560,39 74 1 23362,87 67 1 84054,75 62 12 1 23362,87 63 1 84054,75 70 1 49430,11 65 1 84054,75 71 33712,97 66 84054,75 63 84054,75 70 NWWW. 33712,97 62 14 1 84054,75 70 12 1 33712,97 73 H O P O O O P P O O P O O P O O O O O O P P O P O O P P O P O O P O P O O O P OP PPP POPP POP 13 1 9857,506 64 16 2 14021,39 62 15 1 38925,34 68 1 33712,97 62 84054,75 71 18 4 84054,75 71 1 84054,75 62 14 84054,75 67 1 33712,97 61 16081,59 63 16 1 18168,84 66 1 49430,11 65 2 28560,39 68 1 23362,87 67 2 38925,34 70 23362,87 71 49430,11 67 NNEWHWLAWNAWWWW 44152,16 62 12 38925,34 67 19237,2 67 12 N 49430,11 64 14 1 33712,97 63 8NGWE4GO 2 84054,75 63 1 84054,75 70 1 38925,34 62 1 49430,11 73