Using the California School Data Set from Your Textbook, You $\widehat{\text { ScrRead }}$

question 23

Essay

Using the California School data set from your textbook, you decide to run a regression of the average reading score (ScrRead)on the average mathematics score (ScrMaths). The result is as follows, where the numbers in parenthesis are homoskedasticity only standard errors: $\widehat{\text { ScrRead }}$ = 8.47 + 0.9895×ScrMaths
(13.20)(0.0202)
N = 420, R² = 0.85, SER = 7.8
You believe that the average mathematics score is an unbiased predictor of the average reading score. Consider the above regression to be the unrestricted from which you would calculate SSR_Unrestricted . How would you find the SSR_Restricted? How many restrictions would have to impose?

Comprehend the implications of the First and Second Welfare Theorems in the context of welfare economics.

Understand the impact of homothetic and Cobb-Douglas preferences on consumption allocations.

Recognize how different utility functions affect economic outcomes in a pure exchange economy.

Identify the conditions under which a Pareto optimal allocation is also a competitive equilibrium.

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