Students in Yogyakarta are interested in entering their favorite high school because of the hope that they will be accepted into a top university in Indonesia. For example, entering a famous university is a dummy variable, that is, if a student enters a well-known university is one, and zero if not.

Questions:

a. Make an econometric model that represents the information above. Other factors that influence the model are gender, parent's income, and parents education?

b. Explain why there is a possibility that entering your favorite high school has a correlation with the error term?

c. For example, you have data about the results of student report cards in sophomore year. Explain what you can use from the report card data?

d. For example, you have data about where students live in an area/zone of the favorite high school. For example, this variable is a dummy variable which is equal to one if the student lives in the favorite high school zone (this is related to the school zoning system in Yogyakarta) and zero if the student lives outside the zone. Explain the possibility that this variable could be a good instrumental variable (IV) for students who enter favorite high school or not enter favorite high school?