1. Supposeyou are given the following information:
n= 6 ∑xi = 31 ∑yi = 172 ∑xiyi = 980 ∑xi2 = 205 ∑yi2 = 5162
(a) Find the equation of the sampleregression line. What does this linetell us?
(b) The RSS = 45.2691. What does the RSS tell us in general?
(c) Find S2. What does the S2 tell us ingeneral?
(d) Calculate R2. Is this linear model appropriate forexplaining the values of y?
(e) Calculate a 95% confidence interval forβ2.
(f) Test H0: β2 =0 against H1: β2 > 0 using the 5% level ofsignificance.
2. Explain the difference between the 95%confidence interval for the expected value of the dependent variable given anew observation of the independent variable and the 95% confidence interval forthe actual value of the dependent variable given this new observation on the independent variable.
3. The following equation has been estimatedas:
Yt = 15.5 + 2.3lnX2t+ 0.45(1/X3t) + 1.2Zt
Find the following:
(a) Marginal effect of X3 on Y.
(b) Elasticity of Y with respect to Z.
4. Given thefollowing information:
| (Standard errors are in parentheses) n = 82 |
Variable | Model A | Model B |
| Constant | 54.4 | 71.554 |
| | (23.19) | (19.93) |
| X2 | -0.383 | -0.403 |
| | (0.117) | (0.118) |
| X3 | -0.741 | -0.839 |
| | (0.43) | (0.42) |
| X4 | 2.148 | 2.227 |
| | (0.43) | (0.31) |
| X5 | 1.046 | |
| | (0.691) | |
| X6 | 0.194 | |
| | (0.20) | |
| | | |
| RSS | 2309.978 | 2414.724 |
|  | .576 | .568 |
| R2 | .602 | .584 |
| S2 | 30.394 | 30.958 |
12 (a) Test the overall level of significance ofModel B at a 1% level.
Statethe Null and the Alternative hypotheses and the statistical distribution of thetest statistic.
12 (b) Test the joint significance of variables X5and X6 at the 5% level.
Statethe Null and the Alternative hypotheses and the statistical distribution of thetest statistic.
5. (a) Whatare the properties of the Ordinary LeastSquares regression coefficients?
(b) What does the p-value of a regressioncoefficient tell us?
(c) What is the R2? How is it a measure of the goodness of fit?
(d) In the model Y = β1 + β 2X2+ β 3X3 + u, explain the ways in which the restriction
β2 = β 3 could betested.
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