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For a child i living in a particular school district, let voucheri be a dummy variable equal to one if a child is selected to participate in a school voucher program, and let scorei be that child’s score on a subsequent standardized exam. Suppose that the participation variable, voucheri, is completely randomized in the sense that it is independent of both observed and unobserved factors that can affect the test score.
i) If you run a simple regression scorei on voucheri using a random sample of size n, does the OLS estimator provide an unbiased estimator of the effect of the voucher program?
ii) Suppose you can collect additional background information, such as family income family structure(e.g., whether the child lives with both parents), and parents’ education levels. Do you need to control for these factors to obtain an unbiased estimator of the effects of the voucher program? Explain.
iii) Why should you include the family background variables in the regression? Is there a situation in which you would not include the background variables?
Recall the Application about the decrease in the price of wool in the 1990s to answer the following question(s). In the 1990s, the world price of wool decreased by about 30 percent and prices have remained relatively low since then. In 2012, an organ..
She says the tax will generate $100,000 tax revenues per month. What assumption is she making.
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Market failure occurs in natural monopolies because
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Some companies establish prices for their products by marking up their full manufacturing cost
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If you were a supplier to the furniture producer, would have chosen to see the analysis performed in physical sales units rather than dollars of revenue.
If Mutual Fund A held equal amounts of 100 stocks, each of which had a beta of 1.0, and Mutual Fund B held equal amounts of 10 stocks with betas of 1.0, then the two mutual funds would both have betas of 1.0.
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