1.

Wooldridge Appendix C, Problem 6

a. Null hypothesis H0 : = 0
b. Alternative hypothesis H1 : < 0
466.4
s
15.547,
c. As y = 32.8, 0 = 0, se(
y) = =
30
n
t=

y 0
32.8 0

2.110
se(
y)
15.547

According to the Table G1, P (z 2.110) = 0.0174, which is the p-value.

At 5% significance level, the p-value 0.0174 < 0.05 so we reject the null hypothesis.
At 1% significance level, the p-value 0.0174 > 0.01 so we do not reject the null hypothesis.

d. The estimated fall in consumption, y = 32.8, around 33 ounces seems not large in
magnitude even though statistically it shows some significance. Since 33 ounces are
around equivalent to 1 Liter size bottle, it is ignorable in practice in several years.
e. In this test, other determinants such as incomes, preference and ages are constant over
two-years period.
2. Wooldridge Appendix C, Problem 8
a. Since is approximated by Y = F GM/F GA, then the for Mark Price is
188
=
0.438
429
s

b. The standard deviation is computed by se()=

(1
n

c.

188
0.5
Y
429
r
=
2.579
se(Y )
188
188
(1
)/429
429
429
Looking through the table, P (z 2.579) = 0.0049, which is less than 1%. Therefore
the null hypothesis should be rejected.

3. Wooldridge Chapter 1, Problem 1

a. To conduct the causal relation, the problem of ceteris paribus should be well dealt
with. To make this experiment, we should set the class size as the only determinant,
i.e. keeping all other determinants such as background, teaching materials and gender
constant. We could randomly assign a number of students into different groups. Each
group has different size like 5, 10, 20 and 50. Every group of students are assigned to
study in the exactly same environment. At the end of the fourth graders, all students
performance are measured in groups.
b. The negative correlation is reasonable as it can be implied that in smaller classes,
students get more attention from the teachers and they are forced to work harder
under such closer supervision. Also, in a class of smaller size, students may have closer
relationships so that they are more likely to be encouraged by each other to study
hard.
c. Not necessary. As the data is collected by observation, the ceteris paribus is not
guaranteed. In other words, other variables such as teaching quality, school facility
and family environments are all possibly effect the students performance. As a matter
of fact, the class size in private schools is smaller than that in public schools on average
and meanwhile, the private schools with better education resources are more attractive
to intelligent students. So the negative correlation may be conduced by the comparison
between the private school and public school instead of general students.
2

5.

a.

Department

Man Admit

Women Admit

511.5

88.56

352.8

17

120.25

201.62

137.61

131.25

53.48

94.32

22.38

23.87

Sum

1198.02

556.62

The expected graduate admissions rates are calculated as:

men =

1198.02
= 0.4452
2691

women =

556.62
= 0.3033
1835

As we can observe that the mens admission rate is higher than womens admission
rate.
b. We let P1 = 0.4452 denote the proportion of mens admission and P2 = 0.3033 be
the womens admission. Then the null hypothesis and the alternative hypothesis are:
P1 n1 + P2 n2
H0 : P1 = P2 and H1 : P1 6= P2 The sample proportion is P =
= 0.38768
n1 + n2
r
r
1
1
1
1
The standard error is se = P (1 P )( + ) = 0.38768(1 0.38768)(
+
)=
n1 n2
2691 1835
0.01475
0.4452 0.3033
Thus the t-statistic is
9.617 Obviously the p-value, almost zero, is
0.01475
much less than the significant level. The null hypothesis is rejected.