ECO 311 Miami U eco311mt2Fall 1fall17 w tables

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Published on 31 Jan 2019
School
Miami University
Department
Economics
Course
ECO 311
Professor
Eco311, Second Midterm Exam, Fall 2017.
Prof. Bill Even
-1-
Your Name (Please print) ________________________________________
Your row (Please circle) 1 2 3 4 5
Directions
Place your answers to all questions in the space provided. If the answer to a question is surrounded by
other work, please be sure to clearly identify the answer by circling it. Round all numerical answers to
the nearest 100th (e.g. 1.23) unless specifically told otherwise. Each question is worth 4 points unless
otherwise indicated.
A separate document with regression tables, formulae, and statistical distributions is provided and
referred to throughout the exam.
You have until the end of the class period (80 minutes) to finish the exam. If you want extra time, you
may purchase it at a price of 5 percentage points per minute.
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Eco311, Second Midterm Exam, Fall 2017.
Prof. Bill Even
-2-
For the next several questions regarding home prices, refer to the regression results in table 1.
1. (6 points) Using specification (1), construct a t-statistic for the null hypothesis that the total
family income has no effect on the value of the home owned..
a. What is the relevant t-statistic?
b. What is the critical level of the t-statistic for rejecting the null hypothesis at the .10 level
(two-tailed test)?
c. Can you reject the null at the .10 level?
d. Based on the t-statistic in (a), the p-value must be
i. Less than .01
ii. Between .01 and .05
iii. Between .05 and .10
iv. Greater than .10
2. Using specification (1), construct a 99% confidence interval for the coefficient on total family
income on the house price. Show how you derived this confidence interval and circle your
answer.
3. Using specification (1), what is the marginal effect of an additional 10 years of age on the
predicted home value (in $) if the homeowner is currently 40 years old?
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Eco311, Second Midterm Exam, Fall 2017.
Prof. Bill Even
-3-
4. Home-owners in the sample are between the ages of 21 and 65. Based on these restrictions and
using specification (1),
a. what age minimizes the predicted home value ?
b. what age maximizes the predicted home value ?
5. In specification (2), the dependent variable is switched from value of house to its log and total
family income is replaced with its log. In one sentence, what does the coefficient of .538 imply
about the relationship between income and the value of the home? Be sure to indicate the
quantitative size of the effect of income on value of home owned and be clear about the units of
measurement.
6. (6 points) Based on specification (2),
a. provide a t-statistic for the null hypothesis that a 1% increase in income will lead to a 1%
increase in the predicted value of the home. Show how you calculated your t-statistic.
b. Based on this t-statistic, can you reject the null at the .01 level of significance? In one
sentence, why or why not?
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