Your Task Is to Model Students' Choice for Taking an Additional

question 25

Essay

Your task is to model students' choice for taking an additional economics course after the first principles course. Describe how to formulate a model based on data for a large sample of students. Outline several estimation methods and their relative advantage over other methods in tackling this problem. How would you go about interpreting the resulting output? What summary statistics should be included?

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Definitions:

Marginal Revenue Product

The additional revenue generated from using one more unit of a factor of production.

Marginal Expenditure

The supplementary cost resulting from acquiring an extra unit of a good or service.

Economic Rent

Economic rent is the excess payment made to or received by a factor of production over and above what would have been needed to bring that factor into production.

Competitive Factor Market

A market for inputs where firms purchase resources necessary for production, characterized by many sellers and buyers.