Consider a market with two groups of customers. The individual inverse demand for customers in group one equals: P1 = 20 - q1. The individual inverse demand for customers in group 2 equals: P2 = 20 - 2q2.The marginal cost of production is constant and equal to $2/unit. Assume an equal number of customers in each group. For purposes of the exercise, assume that there is one customer in each group. Assume that the market is served by a single firm with no entry.

3. You are concerned about omitted variable bias in the regressions of Question 1. For that reason, you decide to regress ln(wage) on all other variables in the dataset and use this model as a benchmark.

(a) Report a 95% confidence interval for the estimated slope parameter of educ (3 points), explain the relationship between the confidence interval and hypothesis testing (4 points), and test the hypothesis that one year of additional education would increase hourly wage by 12% (4 points).

(b) Assuming there is no omitted variable bias, discuss the estimated coefficient on female in the benchmark model. In particular, explain what the estimated coefficient on female means on hourly wage (3 points), compare the effect of being female and the effect of one year of additional education (2 points), and discuss whether it is statistically significant or not (2 points).

(c) Using the estimation results of the benchmark model, test the hypothesis that the hourly wage is not affected by the geographic location. Explain how you reach your conclusion. (Hint: use package car.)

(d) Using the estimation results of the benchmark model, test the hypothesis that the wage differential associated with African American is equal to the wage differential associated with Asian American. Explain how you reach your conclusion. (Hint: use package car.)

(e) How would you modify the benchmark model to estimate the effects on hourly wage of one additional year of education separately for each gender (4 points). How do the effects of education differ between the genders and is the difference statistically significant? (3 points) (f) Keoka is an African American woman, working in a metropolitan area. After she obtained her high school diploma, she got a job and started working instead of getting a higher education. Now she has a five-year of experience in the industry and is working full time (40 hours a week). Using the benchmark model, predict her hourly wage. Be careful: the left-hand side variable is ln(wage), but you should predict Keoka's wage.

4. It may be more useful to estimate the effect on earnings of education by using the highest diploma/degree rather than years of schooling. Define four dummy variables to indicate educational achievements; ? lt hs = 1 if educ

(a) (6 points) Create the dummy variables (lt hs, hs, col, some col) as defined above (3 points) and compute the sample means of hourly wage for each of the four education categories (3 points).

(b) (9 points) Regress wage on the four dummies (lt hs, hs, col, some col). You will face a problem. What is the problem here? Under what circumstances would you face the problem (4 points). To avoid it, you now regress wage on three dummies (lt hs, col, some col) excluding hs. Interpret the estimated coefficients and compare the estimation results with the findings in (a)

$690.82 Question 42 (Mandatory) (0.5 points) A deposit of $1,000 earns the following interest rates: 8 percent in the first year 7 percent in the second year, and 8 percent in the third year. What would be the third year future value? $1,248.05 O $3,030.00 $1,230.00 $1,082.15 Question 43 (Mandatory) (0.5 points) What is the present value of a $500 payment made in 4 years when the discount rate is 8 percent?1. The field of accounting that focuses on providing information for external decision makers is a. managerial accounting b. nonmonetary accounting cost accounting d. financial accounting 2. Joshua is the owner of Next Inc., a manufacturer and retailer of computer hardware. Joshua recently bought a new car as a gift for his daughter. Since Joshua paid for the car from the earnings of the business, he recorded it in the books of Next as an asset. Which of the following concepts or principles of accounting is Joshua violating? a. economic entity assumption b. cost principle C. going concern assumption d. monetary unit assumption 3. Which of the following statements would be most useful if an analyst wants to know the profitability of a company? a. balance sheet income statement c. statement of owner's equity d. statement of cash flows Which of the following sequences is the normal sequence of flow of accounting data? a. Source document - Journal - Ledger b. Source document - Ledger - Journal c. Journal - Source document - Ledger d. Ledger - Journal -> Source document 5. A business repays the amount borrowed on a note payable by cash. Which of the following accounts will be debited? a. Bank b. Notes Receivable C. Cash d. Notes Payable24. Which statement is true? a. Solution-focused therapists help families notice "exceptions" to the problem, whereas narrative therapists help families notice "unique outcomes." b. Solution-focused therapists help families notice "unique outcomes", whereas narrative therapists help families notice "exceptions" to the problem 25. Which statement is true? a. It is always best to use an empirically- supported approach to couple therapy b. At the present time, some approaches to couple therapy have obtained much research support, but others that don't have such support may still be effective 26. Which of the following is NOT an empirically- supported treatment for teen substance abuse and/or conduct disorder? a. Multidimensional Family Therapy b. Brief Structural/ Strategic Therapy c. Multisystemic Therapy d. Bowen Intergenerational Family Therapy e. Functional Family Therapy 27. Which Statement is true? a. Qualitative research is open to biases of the researcher, whereas quantitative research is not b. Both qualitative and quantitative research may be open to biases of the researcher4. Qualitative and quantitative variables Aa A3 E Do women wait longer than men to receive their orders at coffee shops? This question was studied by an economics major at Middlebury College. [Sourcez Myers, C.I(. (Sept. 2007). Ladies First: A Field Study of Discrimination in Coffee Shops. Mlddlebury College Economics DisCussion Paper No. 0711.] A researcher compiled the following information from a sample of 25 customers: 0 Wait Time {in seconds) 0 Gender 0 Age 0 Order [regular or fancy) - Height {in inches} The variable is a dichotomous variable. For each of the variables listed in the following table, select whether it is a classication variable or a quantitative variable. Variable Classification Quantitative Walt Time Ge nd er Height Order Age 00000 00000 Question No 3: There are two major views regarding the methodology used in economics. Some of the economists holds the view that economics should he studied from a science perspective, while others argued that economics should be viewed from the perspective of art. Both the views have its own argument in favor and against. As a student of economics, how do you support the view 'eeonomics 1's on or: rather than science "3 Justify your support by analyzing any ve reasons that makes economics an art rather than science. [Answer in 150 200 words]