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ECO 430 University of Miami Economics and Finance Questions

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1. Consider the following sample: Observation Hourly Earnings Years of Education 1 30 20 2 20 16 3 22 12 (a) What is the sample size? (b) Calculate the sample average hourly earnings. (c) Calculate the sample median hourly earnings. (d) Calculate the sample variance of hourly earnings. What is its unit of measurement? (e) Calculate the sample standard deviation of hourly earnings. What is its unit of measurement? (f) Calculate the sample covariance between hourly earnings and years of education. What is its unit of measurement? (g) Calculate the sample correlation between hourly earnings and years of education. a) sample size: 3 b) avg = 24 c) median = 22 d) variance = 28,unit of measurement is dollars^2 e) std = 5.2915, unit of measurement is dollars f) covariance = 16, unit of measurement is dollaryears g) sample correlation = 0.7559 a) 0.75 b) 13.75 c) i. we fail to reject the null hypothesis at 1% significance level ii. lower limit = 0.7451 upper limit = 0.7549 correct answer: 0.75 ± 1.96 * 0.3 = [0.162, 1.338] a) t = -2.73 b) critical t-value = -1.645 c) Reject H0 in favor of H1 at 5% significance level a) For female, the regression equation becomes: wage i = b0 + b1 + ui (1) wage i = c0 + vi (2) wage i = d1 + ei (3) expected wage of a female = b0 + b1 = c0 = d1 b) For male, the regression equation becomes: wage i = b0 + ui (1) wage i = c0 + c2 + vi (2) wage i = d2 + ei (3) expected wage of a male = b0 = c0 + c2 = d2 c) In regression (1) interpret ...
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