(c) EDUC increseses -> residuals also increase, this suggests error var is larger for larger
values of EDUC. F SR1 – SR5 hold, there should not be any patterns evident in residuals.
(d) Estimated equations are
If female: Wage = -14.1681 + 2.3575EDUC
If male: Wage = -3.0544 + 1.8753EDUC
If black: Wage = -15.0859 + 2.4491EDUC
If white: Wage = -6.5507 + 1.9919EDUC
Extra year of education for black worker increases the wage rate higher than for a white worker.
Similarly for female worker then male worker.
(e) estimated quadratic equation; Wage = 6.08283 + 0.073489EDUC 2
Marginal effect is therefore: slope = d(Wage)/dEDUC = 2(0.073489)EDUC
For person with 12 yea