Rogelio Alicor L. Panao 139009 Assignment 2 (Wooldridge, 110-111, C3.2 C3.4) C3.

2 Estimate of the model: price = 0 + 1 sqrft + 2 bdrms + u (i) equation form of the model: ^price = -19.32 + 0.128 (sqrft) + 15.20 (bdrms) (31.05) (0.014) (9.48) n = 88, R2 = 0.6319 (ii) (iii) (iv) (v) (vi) There is an estimated $15.20 increase in the price of house with one more bedroom holding square footage constant (although the p-value for bedroom suggests it is not statistically significant). There is an estimated increase of $33.12 in the price of a house with an additional bedroom that is 140 square feet since: 0.128(140) + 15.20(1) = 33.12 square footage and number of bedrooms taken together explain 63.19% of the variation in price A house 2,438 square feet in size with 4 bedrooms has a predicted selling price of $353,544 since: ^price = -19.32 + 0.128(2438) + 15.20(4) = 353.544 (in thousands of dollars) The residual of the first house in the sample (price = 300) is -54.60. Since this lies below the predicted or fitted value, it suggests the buyer underpaid for the house. The minimum, maximum and average values for the variables atndrte, priGPA, and ACT atndrte Mean (average) Maximum Minimum (ii) 81.70956 100.0000 6.250000 priGPA 2.586775 3.930000 0.857000 ACT 22.51029 32.00000 13.00000

C3.4 (i)

Estimation of the model: atndrte = 0 + 1 priGPA + 2 ACT + u ^atndrte = 75.7 + 17.26 (priGPA) 1.72 (ACT) (3.88) (1.08) (0.17) n = 680, R2 = 0.29

The intercept of 75.7 in this case denotes the attendance rate for a student whose ACT and priGPA scores are zero. In other words, a student whose prior GPA and ACT is zero has a predicted attendance rate of 75.7%. (iii) The priGPA (prior GPA) coefficient indicates that if a students prior GPA is a point higher, the rate of attendance would be 17.26 percentage points higher, holding ACT fixed. The ACT (achievement test score) is negative and suggests that a one point increase in the ACT tends to decrease a students attendance rate by 1.72%. This appears odd at first. However, if we regard GPA as actual performance in college measured by past attendance, and ACT as a measure of potential in college, there is a plausible explanation. Note that ACT is based on innate abilities, while GPA is grade based on class related metrics, which include attendance, among others. It could be that smarter students (those who do well on their achievement test scores) believe they get by even if they skip classes. Predicted attendance rate (atndrte) if priGPA is 3.65 and ACT is 20: ^atndrte = 75.7 + 17.26 (3.65) 1.72 (20) = 104.3 The result is odd (but possible in regression methods where independent variables have upper and lower bounds) since a student cannot have an attendance rate higher than 100 percent. As such, we can predict a 100% attendance rate for a student with the above priGPA and ACT scores. In fact, there is such a student in the sample (observation no. 569) but his attendance rate is just 87.5%. (v) Predicted difference in attendance rates if Student A has priGPA of 3.1 and ACT of 21, and Student B has priGPA of 2.1 and ACT of 26: 17.26 (3.1 2.1) 1.72 (21 26) = 25.86 Hence the predicted difference in attendance rate between Student A and Student B is 25.86%.

(iv)

Appendix:
Dependent Variable: PRICE Method: Least Squares Date: 10/06/11 Time: 01:29 Sample: 1 88 Included observations: 88 Variable C SQRFT BDRMS R-squared Adjusted R-squared S.E. of regression Sum squared resid Log likelihood F-statistic Prob(F-statistic) Coefficient -19.31500 0.128436 15.19819 0.631918 0.623258 63.04484 337845.4 -487.9989 72.96353 0.000000 Std. Error 31.04662 0.013824 9.483517 t-Statistic -0.622129 9.290506 1.602590 Prob. 0.5355 0.0000 0.1127 293.5460 102.7134 11.15907 11.24352 11.19309 1.858074

Mean dependent var S.D. dependent var Akaike info criterion Schwarz criterion Hannan-Quinn criter. Durbin-Watson stat

Dependent Variable: ATNDRTE Method: Least Squares Date: 10/06/11 Time: 16:12 Sample: 1 680 Included observations: 680 Variable C PRIGPA ACT R-squared Adjusted R-squared S.E. of regression Sum squared resid Log likelihood F-statistic Prob(F-statistic) Coefficient 75.70041 17.26059 -1.716553 0.290581 0.288486 14.37936 139980.6 -2776.115 138.6513 0.000000 Std. Error 3.884108 1.083103 0.169012 t-Statistic 19.48978 15.93624 -10.15640 Prob. 0.0000 0.0000 0.0000 81.70956 17.04699 8.173867 8.193817 8.181589 2.010991

Mean dependent var S.D. dependent var Akaike info criterion Schwarz criterion Hannan-Quinn criter. Durbin-Watson stat