Suppose You Are a Potential College Student That Is Interested

question 13

Essay

Suppose you are a potential college student that is interested in determining whether it is worthwhile to declare a certain major.In an effort to find the answer,you collect data on 1,247 college who majored in HUMANITIES,SCIENCE,ENGINEERING,or ENGLISH and you estimate the sample regression function (standard errors in parentheses) $$\begin{array} { lllll } \log~ \widehat {Sala}ry _{i}=&32,473.81+&0.03 \mathrm{GPA}_{i}+&0.02 \text { log StudyHours }\\&( 1,002.97 )& ( 0.0005 ) & ( 0.00003 ) \\&+ 0.01 \text { Science } _ { i } +& 0.08 \text { Engineering } _ { i } +& 0.02 \text { English } _ { i } \\&( 0.02 ) &( 0.025 )&(0.001) \\\end{array}$$
a)Interpret the coefficient estimate on GPA.Is this estimate statistically significant at a 5% level? Economically significant?
b)Interpret the coefficient estimate on Study Hours.Is this estimate statistically significant at the 5% level? Economically significant?
c)Interpret the coefficient estimates on SCIENCE,ENGINEERING,and ENGLISH.Are these estimates statistically significant at the 5% level? Economically significant?
d)Do you believe this is a reasonable model if you are interested in how GPA and Study hours affect Salaries? Why or why not?

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Definitions:

Dutch Auction

A bidding process where the auctioneer starts with a high asking price and gradually lowers it until a participant accepts the price.

Shares

Stakeholding units in a business or financial asset that entitle owners to a fair portion of distributed profits, or dividends.

Market-To-Book Ratio

A financial ratio that compares a company's market value to its book value, indicating how much investors are willing to pay above the net asset value.

Price-Earnings Ratio

A valuation metric for a company, calculated as market value per share divided by earnings per share.