Consider;

(a) Report the estimation results in a common form as introduced in the lecture note 3. For example, see page 9 of the note 3, where the estimates are presented in an equation form, along with standard errors and some measures for model fit.

(b)Construct a scatter diagram of educ and ln(wage) and plot the estimated regression equation in (a) on the scatter diagram. Give informative title and labels for the variables, e.g., do not use the default title and labels.

(c) Assuming that E[e|educ] = 0, interpret the estimated coefficient on educ (2 points) and test whether or not the population coefficient is zero at the 1 % significance level (2 points).

(d) You suspect that the hourly wage could depend on working hours per week. Discuss under what condition(s) the estimated coefficients in (a) would be biased due to the omission of the weekly working hours (2 points). Give a reasonable and intuitive story on why omission of the weekly working hours would cause omitted variable bias in the regression in (a) (2 points). Under your story, explain whether the estimated coefficient on educ in (a) would be overestimated or underestimated (2 points). See pages 4 and 5 of Lecture note 4.

(e) The variable hrswk is the average weekly working hours for each individual in the data. Regress ln(wage) on educ and hrswk. Discuss the estimation results. In particular, how would you revise your answer in (c)? Are the estimates are statistically significant? 2

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)

Question Completion Status! 6 7 8 9 10 11 12 132 141 151 16 176 180 191 20 210 1220 33 341 35 361 376 38 39 40 416 421 43 44 450 460 471 48 1490 600 QUESTION 24 Packard Company engaged in the following transactions during Year 1, Its first year of operations. (Assume all transactions are cash transactions.) ") Acquired $950 cash from the issue of common stock. 3 Borrowed $420 from a bank. f Earned $6iso of revenues cash. A Pald a $50 dividend. During Year 2, Packard engaged in the following transactions. (Assume all winsactions are cash transactions.] To Hisued an additional $315 of common stock. in Forpaid $230 of its debt to the bank 3 Lared Inon of $190 cash Incured copies of $340 Click Boot and Submit to save and submit, Chick Save MAN Annuars to save aif aunvers. MacBook Pro Q W E R T Y U O P A S D F G H J K L Z X C B IN MPractice Question 22 x Journalizing transactions and posting to ledger accounts are the first two steps in the accounting cycle prior to preparing the unadjusted trial balance and journalizing and posting adjusting entries. The proper order of the following steps in the accounting cycle is journalize transactions, post to ledger accounts, prepare unadjusted trial balance, journalize and post adjusting entries. O prepare unadjusted trial balance, journalize transactions, post to ledger accounts, journalize and post adjusting entries. O prepare unadjusted trial balance, journalize and post adjusting entries, journalize transactions, post to ledger accounts. journalize transactions, prepare unadjusted trial balance, post to ledger accounts, journalize and post adjusting entries " .....QUESTION 5 The value added for Cookieinc is: $15,000 $25,000 $30,000 $35,000 QUESTION 6 The GDP for this economy is: C$70,000 $85,000 $100,000 C$115,000 QUESTION 7 The government expenditure in this economy is: $12,000 C $5,000 C $3,000 C $0 QUESTION 8QUESTION 10 Terminating a business by selling off all its assets is called as O a. Restructuring O b. Divestment O c. Liquidation Od. Declaring bankruptcy QUESTION 11 A generic Porter's strategyA manager randomly selected 24 large cash transactions at a bank that were made in January. The manager then carefully tracked down the details of these transactions to see that the correct procedures for reporting these large transactions were followed. This bank typically makes 1,200 such transactions monthly. (a) Is it appropriate to use a binomial model in this situation? (b) If the chance for a procedural error is 10%, is it likely that the auditor finds more than 2 such transactions? For this component, argue informally, without computing the probability, from the characteristics of the binomial model. (c) Find the probability in part b