Question: Use the data in CHARITY to answer

> Suppose that log1y2 follows a linear model with a linear form of heteroskedasticity. We write this as so that, conditional on x, u has a normal distribution with mean (and median) zero but with variance h(x) that depends on x. Because Med(u|x) = 0, equat

> The point of this exercise is to show that tests for functional form cannot be relied on as a general test for omitted variables. Suppose that, conditional on the explanatory variables

> Consider the simple regression model with classical measurement error, y =

> In the model (9.17), show that OLS consistently estimates a and b if

> In Example 4.4, we estimated a model relating number of campus crimes to student enrollment for a sample of colleges. The sample we used was not a random sample of colleges in the United States, because many schools in 1992 did not report campus crimes.

> The following equation explains weekly hours of television viewing by a child in terms of the child’s age, mother’s education, father’s education, and number of siblings: We are worried that tvhoursp

> Use the data set GPA1 for this exercise. (i) Use OLS to estimate a model relating colGPA to hsGPA, ACT, skipped, and PC. Obtain the OLS residuals. (ii) Compute the special case of the White test for heteroskedasticity. In the regression of

> Let math10 denote the percentage of students at a Michigan high school receiving a passing score on a standardized math test (see also Example 4.2). We are interested in estimating the effect of per-student spending on math performance. A simple model is

> Let us modify Computer Exercise C4 in Chapter 8 by using voting outcomes in 1990 for incumbents who were elected in 1988. Candidate A was elected in 1988 and was seeking reelection in 1990; voteA90 is Candidate A’s share of the two-part

> The R-squared from estimating the model using the data in CEOSAL2, was R2 5=.353 (n = 177) . When ceoten2 and comten2 are added, R2 = .375. Is there evidence of functional form misspecification in this model? log(salary) = Bo + Bilog(sales) + Bzlog(m

> Use the data in ECONMATH to answer this question. The population model is (i) For how many students is the ACT score missing? What is the fraction of the sample? Define a new variable, actmiss, which equals one if act is missing, and zero otherwise. (ii)

> Use the data in CEOSAL2 to answer this question. (i) Estimate the model by OLS using all of the observations, where lsalary, lsales, and lmktvale are all natural logarithms. Report the results in the usual form with the usual OLS standard errors. (You ma

> (i) Using all of the data, run the regression lavgsal on bs, lenrol, lstaff, and lunch. Report the coefficient on bs along with its usual and heteroskedasticity-robust standard errors. What do you conclude about the economic and statistical significance

> Use the data in MURDER only for the year 1993 for this question, although you will need to first obtain the lagged murder rate, say mrdrte21. (i) Run the regression of mrdrte on exec, unem. What are the coefficient and t statistic on exec? Does this regr

> You need to use two data sets for this exercise, JTRAIN2 and JTRAIN3. The former is the outcome of a job training experiment. The file JTRAIN3 contains observational data, where individuals themselves largely determine whether they participate in job tra

> You are to compare OLS and LAD estimates of the effects of 401(k) plan eligibility on net financial assets. The model is (i) Use the data in 401KSUBS to estimate the equation by OLS and report the results in the usual form. Interpret the coefficient on e

> Use the data in TWOYEAR for this exercise. (i) The variable stotal is a standardized test variable, which can act as a proxy variable for unobserved ability. Find the sample mean and standard deviation of stotal. (ii) Run simple regressions of jc and uni

> Use the data in LOANAPP for this exercise. (i) Estimate the equation in part (iii) of Computer Exercise C8 in Chapter 7, computing the heteroskedasticity- robust standard errors. Compare the 95% confidence interval on Bwhite with the nonrobust confidence

> Use the data in LOANAPP for this exercise. (i) How many observations have obrat > 40, that is, other debt obligations more than 40% of total income? (ii) Reestimate the model in part (iii) of Computer Exercise C8, excluding observations with obrat > 40.

> In example given below by dropping schools where teacher benefits are less than 1% of salary. (i) How many observations are lost? (ii) Does dropping these observations have any important effects on the estimated tradeoff? Example: Let totcomp denote aver

> Use the data in RDCHEM to further examine the effects of outliers on OLS estimates and to see how LAD is less sensitive to outliers. The model is where you should first change sales to be in billions of dollars to make the estimates easier to interpret.

> Use the data for the year 1990 in INFMRT for this exercise. (i) Reestimate equation (9.43), but now include a dummy variable for the observation on the District of Columbia (called DC). Interpret the coefficient on DC and comment on its size and signific

> Use the data from JTRAIN for this exercise. (i) Consider the simple regression model where scrap is the firm scrap rate and grant is a dummy variable indicating whether a firm received a job training grant. Can you think of some reasons why the unobserve

> Use the data set WAGE2 for this exercise. (i) Use the variable KWW (the “knowledge of the world of work” test score) as a proxy for ability. What is the estimated return to education in this case? (ii) Now, use IQ and KWW together as proxy variables. Wha

> (i) Apply RESET from equation (9.3) to the model estimated.. Is there evidence of functional form misspecification in the equation? (ii) Compute a heteroskedasticity-robust form of RESET. Does your conclusion from part (i) change? y β + βχ + + Brik +

> The data set NBASAL contains salary information and career statistics for 269 players in the National Basketball Association (NBA). Estimate a model relating points-per-game (points) to years in the league (exper), age, and years played in college (coll)

> Use the data in HPRICE1 for this exercise. (i) Estimate the model and report the results in the usual form, including the standard error of the regression. Obtain predicted price, when we plug in lotsize 5 10,000, sqrft 5 2,300, and bdrms 5 4; round this

> Use the data in ATTEND for this exercise. In the model of Example 6.3, argue that Use equation (6.19) to estimate the partial effect when priGPA 5 2.59 and atndrte 5 82. Interpret your estimate. Show that the equation can be written as where Î&cedi

> (i) Using the data in CRIME1, estimate this model by OLS and verify that all fitted values are strictly between zero and one. What are the smallest and largest fitted values? (ii) Estimate the equation by weighted least squares, as discussed in Section 8

> Use the data in VOTE1 for this exercise. Consider a model with an interaction between expenditures: What is the partial effect of expendB on voteA, holding prtystrA and expendA fixed? What is the partial effect of expendA on voteA? Is the expected sign f

> Use the housing price data in HPRICE1 for this exercise. Estimate the model and report the results in the usual OLS format. (ii) Find the predicted value of log(price), when lotsize = 20,000, sqrft = 2,500, and bdrms = 4. Find the predicted value of pric

> Use the data in GPA2 for this exercise. Estimate the model where hsize is the size of the graduating class (in hundreds), and write the results in the usual form. Is the quadratic term statistically significant? (ii) Using the estimated equation from par

> Consider a model where the return to education depends upon the amount of work experience (and vice versa): (i) Show that the return to another year of education (in decimal form), holding exper fixed, is β1 + β3exper. (ii) State

> Use the data in WAGE1 for this exercise. Use OLS to estimate the equation and report the results using the usual format. Is exper2 statistically significant at the 1% level? Using the approximation find the approximate return to the fifth year of exper

> Use the data in BENEFITS to answer this question. It is a school-level data set at the K–5 level on average teacher salary and benefits. See Example 4.10 for background. (i) Regress lavgsal on bs and report the results in the usual form

> Use the data in MEAP00 to answer this question. (i) Estimate the model / by OLS, and report the results in the usual form. Is each explanatory variable statistically significant at the 5% level? (ii) Obtain the fitted values from the regression in part

> Use the subset of 401KSUBS with fsize 5 1; this restricts the analysis to single-person households; see also Computer Exercise C8 in Chapter 4. (i) What is the youngest age of people in this sample? How many people are at that age? (ii) In the model wha

> (i) Run the regression ecolbs on ecoprc, regprc and report the results in the usual form, including the R-squared and adjusted R-squared. Interpret the coefficients on the price variables and comment on their signs and magnitudes. (ii) Are the price va

> Use the data in BWGHT2 for this exercise. (i) Estimate the equation by OLS, and report the results in the usual way. Is the quadratic term significant? (ii) Show that, based on the equation from part (i), the number of prenatal visits that maximizes log(

> Use the data in PNTSPRD for this exercise. (i) The variable sprdcvr is a binary variable equal to one if the Las Vegas point spread for a college basketball game was covered. The expected value of sprdcvr, say m, is the probability that the spread is cov

> Use the data in KIELMC, only for the year 1981, to answer the following questions. The data are for houses that sold during 1981 in North Andover, Massachusetts; 1981 was the year construction began on a local garbage incinerator. (i) To study the effect

> There has been much interest in whether the presence of 401(k) pension plans, available to many U.S. workers, increases net savings. The data set 401KSUBS contains information on net financial assets (nettfa), family income (inc), a binary variable for

> Use the data in LOANAPP for this exercise. The binary variable to be explained is approve, which is equal to one if a mortgage loan to an individual was approved. The key explanatory variable is white, a dummy variable equal to one if the applicant was w

> Use the data in WAGE1 for this exercise. (i) Use equation (7.18) to estimate the gender differential when educ = 12.5. Compare this with the estimated differential when educ = 0. (ii) Run the regression used to obtain (7.18), but with female (educ - 12.5

> Use the data in SLEEP75 for this exercise. The equation of interest is (i) Estimate this equation separately for men and women and report the results in the usual form. Are there notable differences in the two estimated equations? (ii) Compute the Chow t

> Define a dummy variable, rosneg, which is equal to one if ros Discuss the interpretation and statistical significance of log(salary) = Bo + Bilog(sales) + Brroe + B3rosneg + u.

> Use the data in GPA2 for this exercise. (i) Consider the equation where colgpa is cumulative college grade point average; hsize is size of high school graduating class, in hundreds; hsperc is academic percentile in graduating class; sat is combined SAT

> A model that allows major league baseball player salary to differ by position is where outfield is the base group. (i) State the null hypothesis that, controlling for other factors, catchers and outfielders earn, on average, the same amount. Test this hy

> Use the data in WAGE2 for this exercise. (i) Estimate the model and report the results in the usual form. Holding other factors fixed, what is the approximate difference in monthly salary between blacks and nonblacks? Is this difference statistically s

> Use VOTE1 for this exercise. (i) Estimate a model with voteA as the dependent variable and prtystrA, democA, log(expendA), and log(expendB) as independent variables. Obtain the OLS residuals,

> Use the data in APPLE to answer this question. (i) Define a binary variable as ecobuy = 1 if ecolbs > 0 and ecobuy = 0 if ecolbs = 0. In other words, ecobuy indicates whether, at the prices given, a family would buy any ecologically friendly apples. W

> Use the data set in BEAUTY, which contains a subset of the variables (but more usable observations than in the regressions) reported by Hamermesh and Biddle (1994). (i) Find the separate fractions of men and women that are classified as having above aver

> Use the data in 401KSUBS for this exercise. (i) Compute the average, standard deviation, minimum, and maximum values of nettfa in the sample. (ii) Test the hypothesis that average nettfa does not differ by 401(k) eligibility status; use a twosided altern

> Use the data in NBASAL for this exercise. (i) Estimate a linear regression model relating points per game to experience in the league and position (guard, forward, or center). Include experience in quadratic form and use centers as the base group. Report

> Use the data in GPA1 for this exercise. Add the variables mothcoll and fathcoll to the equation estimated in (7.6) and report the results in the usual form. What happens to the estimated effect of PC ownership? Is PC still statistically significant? T

> Use the data in CATHOLIC to answer this question. (i) In the entire sample, what percentage of the students attend a Catholic high school? What is the average of math12 in the entire sample? (ii) Run a simple regression of math12 on cathhs and report the

> Use the data in FERTIL2 to answer this question. (i) Find the smallest and largest values of children in the sample. What is the average of children? Does any woman have exactly the average number of children? (ii) What percentage of women have electrici

> Use the data in BEAUTY for this question. (i) Using the data pooled for men and women, estimate the equation and report the results using heteroskedasticity-robust standard errors below coefficients. Are any of the coefficients surprising in either their

> Use the data in FERTIL2 to answer this question. (i) Estimate the model and report the usual and heteroskedasticity-robust standard errors. Are the robust standard errors always bigger than the nonrobust ones? (ii) Add the three religious dummy variable

> Use the data in MEAP00 to answer this question. (i) Estimate the model by OLS and obtain the usual standard errors and the fully robust standard errors. How do they generally compare? (ii) Apply the special case of the White test for heteroskedasticity.

> Apply the full White test for heteroskedasticity to equation (8.18). Using the chisquare form of the statistic, obtain the p-value. What do you conclude? log(price) –1.30 + .168 log(lotsize) + .700 log(sqrft) + 0.37 bdrms (.093) = (.65) (.038) (.028)

> Jordan Mendelson is interested in purchasing a franchise in a meal-preparation business. Customers will come to the business to assemble gourmet dinners and then take the prepared meals to their homes for cooking. The franchisor requires each store to us

> Two African American plaintiffs sued the producers of the reality television series The Bachelor and The Bachelorette for racial discrimination. The plaintiffs claimed that the shows had never featured a person of color in the lead role. Plaintiffs also

> Go to Appendix G at the end of this text and examine the excerpt of Case No. 4, Dees v. United Rentals North America, Inc. Review and then brief the case, making sure that your brief answers the following questions. 1. issue: What conduct on the part of

> Why has the federal government limited the application of the statutes discussed in this chapter to firms with a specified number of employees, such as fifteen or twenty? Should these laws apply to all employers, regardless of size? Why or why not?

> Nicole Tipton and Sadik Seferi owned and operated a restaurant in Iowa. Acting on a tip from the local police, agents of Immigration and Customs Enforcement executed search warrants at the restaurant and at an apartment where some restaurant workers live

> Dean Brothers Corp. owns and operates a steel-drum manufacturing plant. Lowell Wyden, the plant superintendent, hired Best Security Patrol, Inc. (BSP), a security company, to guard the property and “deter thieves and vandals.” Some BSP security guards, a

> What policy is served by the law that employers do not own the copyrights for works created by independent contractors (unless there is a written “work for hire” agreement)

> Cathy Coleman took out loans to complete her college education. After graduation, Coleman was irregularly employed as a teacher. Eventually, she filed a petition in a federal bankruptcy court under Chapter 13. The court confirmed a five-year plan under w

> Nick Sabol, doing business in the recording industry as Sound Farm Productions, applied to Morton Community Bank for a $58,000 loan to expand his business. Besides the loan application, Sabol signed a promissory note that referred to the bank’s rights in

> Melvin Lyttle told John Montana and Paul Knight about a “Trading Program” that purportedly would buy and sell securities in deals that were fully insured, as well as monitored and controlled by the Federal Reserve Board. Without checking the details or e

> Redford is a seller of electric generators. He purchases a large quantity of generators from a manufacturer, Mallon Corp., by making a down payment and signing an agreement to pay the balance over a period of time. The agreement gives Mallon Corp. a secu

> Big Apple Consulting USA, Inc., provided small publicly traded companies with a variety of services, including marketing, business planning, and Web site development and maintenance. CyberKey Corp. sold customizable USB drives. CyberKey falsely informed

> Three shareholders of iStorage sought to sell their stock through World Trade Financial Corp. The shares were restricted securities—that is, securities acquired in an unregistered, private sale. Restricted securities typically bear a “restrictive” legend

> Dodona I, LLC, invested $4 million in two securities offerings from Goldman, Sachs & Co. The investments were in collateralized debt obligations (CDOs). Their value depended on residential mortgage-backed securities (RMBSs), whose value in turn depended

> Matrixx Initiatives, Inc., makes and sells over-the-counter pharmaceutical products. Its core brand is Zicam, which accounts for 70 percent of its sales. Matrixx received reports that some consumers had lost their sense of smell (a condition called anosm

> David Gain is the chief executive officer (CEO) of Forest Media Corp., which is interested in acquiring RS Communications, Inc. To initiate negotiations, Gain meets with RS’s CEO, Gill Raz, on Friday, July 12. Two days later, Gain phones his brother, Mar

> Langley Brothers, Inc., a corporation incorporated and doing business in Kansas, decides to sell common stock worth $1 million to the public. The stock will be sold only within the state of Kansas. Joseph Langley, the chair of the board, says the offerin

> Lyons incorporated Lyons Concrete, Inc., in Montana, but did not file its first annual report, so the state involuntarily dissolved the firm in 1996. Unaware of the dissolution, Lyons continued to do business as Lyons Concrete. In 2003, he signed a writt

> Jennifer Hoffman took her cell phone to a store owned by R&K Trading, Inc., for repairs. Later, Hoffman filed a suit in a New York state court against R&K, Verizon Wireless, Inc., and others, seeking to recover damages for a variety of torts, including i

> Scott Snapp contracted with Castlebrook Builders, Inc., which was owned by Stephen Kappeler, to remodel a house. Kappeler estimated that the remodeling would cost around $500,000. Eventually, however, Snapp paid Kappeler more than $1.3 million. Snapp fil

> Kids International Corp. produced children’s wear for Walmart and other retailers. Gila Dweck was a Kids director and its chief executive officer. Because she felt that she was not paid enough for the company’s success, she started another firm, Success

> 73-75 Main Avenue, LLC, agreed to lease commercial property to PP Door Enterprise, Inc., if its principal officers executed personal guaranties and provided credit information. Nan Zhang signed the lease as manager of PP Door. The principals of PP Door s

> Stanka Woods is the sole member of Hair Ventures, LLC. Hair Ventures owns 3 million shares of stock in Biolustré Inc. For several years, Woods and other Biolustré shareholders did not receive notice of shareholders’ meetings or financial reports. On lear

> Mark Burnett and Kamran Pourgol were the only shareholders in a corporation that built and sold a house. When the buyers discovered that the house exceeded the amount of square footage allowed by the building permit, Pourgol agreed to renovate the house

> Thomas Persson and Jon Nokes founded Smart Inventions, Inc., to market household consumer products. The success of their first product, the Smart Mop, continued with later products, which were sold through infomercials. Persson and Nokes were the firm’s

> Oxy Corp. is negotiating with the Wick Construction Co. for the renovation of the Oxy corporate headquarters. Wick, the owner of the Wick Construction Co., is also one of the five members of Oxy’s board of directors. The contract terms are standard for t

> Cummings, Okawa, and Taft are recent college graduates who want to form a corporation to manufacture and sell personal computers. Peterson tells them he will set in motion the formation of their corporation. First, Peterson makes a contract with Owens fo

> Blushing Brides, LLC, a publisher of wedding-planning magazines in Columbus, Ohio, opened an account with Gray Printing Co. in July 2000. On behalf of Blushing Brides, Louis Zacks, the firm’s member-manager, signed a credit agreement that identified the

> Siloam Springs Hotel, LLC, operates a Hampton Inn in Siloam Springs, Arkansas. Siloam bought insurance from Century Surety Co. to cover the hotel. When guests suffered injuries due to a leak of carbon monoxide from the heating element of an indoor swimmi

> Fadal Machining Centers, LLC, and MAG Industrial Automation Centers, LLC, sued a New Jersey–based corporation, Mid-Atlantic CNC, Inc., in federal district court. Ten percent of MAG was owned by SP MAG Holdings, a Delaware LLC. SP MAG had six members, inc

> James Williford, Patricia Mosser, Marquetta Smith, and Michael Floyd formed Bluewater Logistics, LLC, to bid on construction contracts after Hurricane Katrina struck the Gulf Coast. Under Mississippi law, every member of a member-managed LLC is entitled

> Walter Van Houten and John King formed 1545 Ocean Avenue, LLC, with each managing 50 percent of the business. Its purpose was to renovate an existing building and build a new commercial building. Van Houten and King quarreled over many aspects of the wor

> New York resident Esther Braunstein worked as an usher at Lincoln Center, held an administrative position with Citibank, was a school crossing guard, and assisted disabled persons and others as a volunteer on Roosevelt Island and at the New York Foundlin

> Holiday Isle Resort & Marina, Inc., operated four restaurants, five bars, and various food kiosks at its resort in Islamorada, Florida. Holiday entered into a “joint venture agreement” with Rip Tosun to operate a fifth restaurant called Rip’s—A Place for

> Joe, a resident of New Jersey, wants to open a restaurant. He asks his friend Kay, who is an experienced attorney and a New Yorker, for her business and legal advice in exchange for a 20 percent ownership interest in the restaurant. Kay helps Joe negotia

> Faraway Corp. supplies business equipment. Faraway is considering entering into two contracts, one with a joint stock company east of the Mississippi River and the other with a business trust formed by a number of sole proprietors on the West Coast. Both

> John, Lesa, and Trevor form a limited liability company. John contributes 60 percent of the capital, and Lesa and Trevor each contribute 20 percent. Nothing is decided about how profits will be divided. John assumes that he will be entitled to 60 percent

> Elliot Willensky and Beverly Moran formed a partnership to buy, renovate, and sell a house. Moran agreed to finance the effort, which was to cost no more than $60,000. Willensky agreed to oversee the work, which was to be done in six months. Willensky li

> Leisa Reed and Randell Thurman lived together in Spring City, Tennessee. Randell and his father, Leroy, formed a cattle-raising operation and opened a bank account in the name of L&R Farm. Within a few years, Leroy quit the operation. Leisa and Randell e