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State your reasons why you think that a standard logit or probit model is sufficient without resorting to IV estimation.
How would you use IV to obtain consistent estimates of the parameters of the two models? Show the necessary calculations.
What happens to price and quantity when supply and demand change at the same time?
Explain how the market works. In your explanation, be sure to illustrate how increasing global demand for oil has impacted the equilibrium price.
Which type of oligopoly behavior best explains this situation? Should it change the price it charges when its marginal costs change a little?
Describe what happens to your budget constraint if the price of one item in your budget becomes less expensive. Show this on a graph.
Draw Kate's budget constraint. If espresso goes on sale for $2 a cup, what does her new budget constraint look like?
Explain why many seniors often earn lower grades in their last semester before graduation. What is the opportunity cost of reading this textbook?
By referencing events in the news or something from your personal experiences, describe one example of each of the five foundations of economics.
Suppose you regress the log of the wage rate on the logs of education and experience. How would you interpret the slope coefficients in this regression?
Show the diagnostic tests you use. How would you resolve the problem of heteroscedasticity, if it is present in the model? Show the necessary calculations.
For the wage determination model discussed in the text, how would you find out if there are any outliers in the wage data?
How would you find out if the error variance is hetero scedastic? If your finding is in the affirmative, how would you resolve the problem?
What other variables do you think should be included in the wage determination model? How would that change the models discussed in the text?
How would you obtain the heteroscedastidty-corrected standard errors for the grouped logit?
As an alternative, estimate a multinomial logit model (MLM) using the same data. Interpret the model and compare it with the proportional odds model.
How would you decide on the best way to do this? Assuming this is a free market, why is it difficult to maintain inelastic demand and high profits?
Suppose that the percentage change in demand for tomatoes is 0.7, the price elasticity of supply is 3.33. What is the price elasticity of demand?
What would make a country decide to change from a common currency, like the euro, back to its own currency?
Can central banks pursue and achieve multiple goals or must they be confined solely tofighting inflation? What goals are embedded in the Taylor rule? Discuss.
What are the benefits you expect to derive and the costs you expect to incur from studying for the final exam in this course?
Draw the budget constraint of an individual facing a negative income tax with a constant marginal tax rate of, say, 30 percent.
Calculate the income elasticity of demand for this good if income increases from $10,000 to $20,000. Is this a normal or an inferior good? How can you tell?
Present a thorough analysis of fiscal policy. Detail the effects of discretionary fiscal policies, the various policy levers and the impact of crowding out.
Determine the marginal propensities to consume MPC and Save MPS. What is the relationship between MPC and the MPS.