Assignments more than 3 days late will not be marked.
Question 1 (40 marks;)
Life expectancy is an indicator of how long a person can expect to live on average given the
environment s/he is in. It is a standard measure of population wellbeing in general. It is
commonly used by the government for policy planning related to future population ageing in a
country. It is also commonly used in calculating life insurance policy.
There are a number of studies done on the relationship between life expectancy and income. It
is believed that people with higher incomes tend to live longer than people with lower incomes
and the relationship can be linear or nonlinear.
Consider the data on life expectancy and income for the year 2015 from 194 countries obtained
from http://www.gapminder.org/ and reported in LifeExp2015.xls. The variable LE represents
life expectancy at birth in years. The variable GDP represents the country’s Gross Domestic
Product (GDP) per capita after adjusting for purchasing power parity so that GDP from
different countries are comparable. The unit of measurement for GDP is in 1000 international
Consider three functional forms for the relationship between life expectancy and income.
i 1 2 i i LE GDP e (1.1)
1 2ln i i i LE GDP v (1.2)
i 1 2 i i LE GDP (1.3)
(a) Explain what each of the above functional forms imply in terms of the relationship
between life expectancy and GDP? (6 marks)
(b) Using the data for 194 countries, estimate the three equations and report the results the
usual way. (6 marks)
(c) Plot the fitted equations onto a scatterplot of the data. Which equation seems to best
match your observations? Explain why? (6 marks)
(d) Obtain and comment on residual plots against the explanatory variable for each
equation. Which model seems best specified? (6 marks)
(e) Obtain histograms of your residuals for each model and discuss if they resemble a
normal distribution. Perform a test of normality on each set of residuals. (6 marks)
(f) Interpret and compare the 2 R for each of your three equations, and explain why it is
possible to make this comparison. (4 marks)
(g) Which is your preferred model? Use your answers in parts b) to f) above to justify your
choice. (6 marks)
Question 2 (25 marks for ETF5910 students only)
This question continues from Question 1. It may be of interest to compare life expectancy
between two levels of incomes. Some previous studies have shown that a big proportion of
population around the world receive income in 2015 around 2,000 international dollars. At the
same time, some people at the high end of the global income distribution receive income more
than 30,000 international dollars. Using the preferred model in Question 1 (g):
(a) Predict life expectancy values for the two levels of GDPs. Obtain a 99% prediction
interval for both predicted life expectancy values. Compare and comment on the
finding. (10 marks)
(b) Find the estimates of the slopes
at the points where GDP 2,000 and
GDP 30,000. (2 marks)
(c) Find estimates of the elasticities
d LE GDP
d GDP LE
at the point where GDP 2,000 and
GDP 30,000. (3 marks)
(d) Based on the finding from parts (a) to (c), write a short report (not more than half a
page) in terms of life expectancy between low and high income populations.
QUESTION 3 (45 marks)
Consider the following total cost function where i TC represents total cost for the ith firm and
i Q represents quantity of output.
i 1 2 i 3 i 4 i i TC Q Q Q e (3.1)
Two other costs that may be of interest are average cost per quantity of output and marginal
cost for an extra output. Average cost is obtained by dividing total cost by quantity of output.
Using total cost as defined in equation (3.1) average cost function can be defined as:
2 1 3 4
i i i i
AC Q Q v
where the new error term is i i i v e Q . Note that the parameters 1 2 3 4 , , and are the same
parameters as those in equation (3.1).
Marginal cost is obtained from taking derivative of total cost with respect to output. From the
total cost function defined in (3.1) marginal cost function can be derived as:
2 3 4 2 3 i i i MC Q Q (3.3)
Data on a sample of 28 firms in the clothing industry are in the file clothes.wf1.
(a) Consider the total cost function (3.1). What sign would you expect for 2 3 , and 4 ?
Explain why. Answer this before looking at the data. (5 marks)
(b) Estimate the total cost function (3.1) and report results. Are the signs for the estimated
coefficients turn out as expected? (5 marks)
(c) Using 0.01 test individually the individual significance of 2 3 4 , and .(6 marks)
(d) Using 0.01 test the significance of the model. (3 marks)
(e) Test whether the data suggest that a linear total cost function will suffice. (5 marks)
(f) What parameter restrictions imply a linear average cost function? Test these restrictions.
(g) Calculate the predicted total, average and marginal cost for output 1,2, ,10 i Q using
the parameter estimates from (b). (3 marks)
(h) Graph the predicted total, average and marginal cost for output 1,2, ,10 i Q calculated
in (g). (3 marks)
(i) It is believed that it is profitable for firms to produce when price exceeds average cost
and firms will decide to shut down if price is less than average cost. Also, average cost
is at minimum when i i AC MC . From the graph in (h) roughly find the output level i Q
where i i AC MC . Calculate the minimum average cost implied by the estimated
parameters in (b). At what price should the firm make a decision to shut down?
(k) Find estimates of 1 2 3 4 , , and by applying least squares to the average cost function
defined in (3.2). Report the results. Is it possible to make any decision about which set
of estimates might be “best”? (6 marks)
nt of Econometrics and Business Statistics
ETF2100/5910 Introductory Econometrics
Assignment 1, Semester 1, 2018
Worth 10% of Final Mark
Due 4pm Friday April 20
(Students must submit a soft copy to Moodle
and a hard copy into your tutor’s mailbox in Building H Level 5)
PLAGIARISM AMOUNTS TO CHEATING UNDER PART 7 OF THE MONASH UNIVERSITY
REGULATION. DO NOT COPY ASSIGNMENTS!
Notation used in the assignment needs to be written correctly and properly. It is
recommended that students submit hand-written assignments if they cannot type
Your assignment must have the assignment cover sheet. It can be found in Assignment
section of the Moodle.
This assignment comprises three questions. ETF2100 students do Questions 1 and 3.
ETF5910 students do all three questions.
Mark allocations are given for each question. Marks are also awarded for
Total marks for ETF2100 and ETF5910 students are 85 and 110, respectively.
Marks will be deducted for late submission on the following basis:
10% for each day late, up to a maximum of 3 days.
Once in a while, individuals have been known to state," What would they be able to do to enable somebody they to realize that is being manhandled?" There are a wide range of arrangements that individuals can do to help those in require that are engaged with an aggressive behavior at home relationship. As indicated by the Michigan State Police there are different arrangements engaged with helping somebody. Comprehending what one is discussing by having some foundation on abusive behavior at home. Continuously let them realize that your ears are open at whenever they have to talk. Help them however much as could reasonably be expected by being aware, understanding and steady in finding out about their security. In conclusion, never let them think it is their blame, continue tending to that however much as could be expected. There is dependably approaches to get help when somebody needs it. They can do as such by calling the secret National Domestic Hotline (DMVH) at 1-800-799-SAFE (7233), they are accessible to the United States, 24 hours, 7 days seven days, and open 365 days a year. The DMVH have advisors to help them in getting them data and referrals for themselves, their kids, protect, and legitimate help (Michigan State Police). There are numerous different things that you could do to help a casualty or even a casualty herself can do. It might be similarly as simple as getting a telephone directory to discover what associations in your group assist with, for example, business or even tyke mind. There are other distinctive things that should be possible, for example, looking for guiding or even care groups. While you are looking for advising, ensure you distinguish climate the instructor is for the mishandled and has had understanding of working with the manhandled. Above all else remain dynamic however much as could be expected to help your confidence, fearlessness, and getting you freedom back (Women Web, Getting Help). Aggressive behavior at home sanctuary, frequently called a ladies' haven is a building or set of lofts where casualties of manhandle can look for shield. These asylum areas are kept private so these ladies' abusers can't discover them. Safe houses are known to furnish those manhandled and their youngsters with haven, nourishment and childcare. Since there are exceptionally constrained circumstances for dwelling at a safe house, numerous asylums aid arrangement of lasting homes and occupations (Help manage). There are diverse things that should be possible subsequent to leaving a haven so their abuser doesn't discover them. The best 3 things that you can do are: 1.) get and unlisted number, 2) utilize a P.O. Box, 3.) open new financial balances and Mastercards (Help manage). In the wake of finding how genuine Domestic brutality really was, the Domestic Violence Bill, 2006 was passed. The Domestic Violence Bill was proposed to permit more help and alleviation of the mishandle. The reason for this Bill was to permit those associated with abusive behavior at home the most extreme security that the laws can give. These laws have made it compulsory for all police headquarters to have particular offices to manage and give lawful obligation on the officers to aid a protest abusive behavior at home. Under the arrangement of this bill, cops are assume to educate the casualty with respect to their rights under, help in getting cover, offer therapeutic treatment, and to stop a criminal grumbling. The Domestic Violence Act additionally enables cops to capture the charged culprit, without a warrant who is sensibly suspected to have conferred or who is debilitating to submit a demonstration of aggressive behavior at home on a casualty. On the off chance that any individual is captured they are to be brought before a justice inside forty-eight hours (Government Gazette) Under the Michigan Constitution, (Art. I, Sec. 24; eff. Dec. 24, 1988) and the Crime Victim's Rights Act, (1985 PA 87; MCL 780.751) have given wrongdoing casualties the privilege to be treated with nobility and regard. Ensuring all is dealt with in an auspicious way following a capture. The casualty likewise has the privilege to get crisis and restorative administrations. Get a clarification of all court procedures. This demonstration enables them to be ensured of being free of any dangers, demonstrations, as well as release from your boss. The name of the Prosecutor's who is taking care of the case. Any booked court procedures, including condemning, the litigant's discharge on bond or escape from guardianship while anticipating trial. The probation offices address and phone number. Go to the court trial and put forth an oral expression to a pre-sentence specialist, and to compose an effect explanation which will be incorporated into the pre-sentence report. Casualties are additionally permitted to get data with respect to the conviction, sentence, detainment, and arrival of the charged. (Michigan Prosecuting Attorney Associations). There are various impacts of the mishandle. On the off chance that somebody had physical manhandle they may experience the ill effects of long haul wellbeing entanglements. Mishandled ladies frequently have nervousness, pressure, low vitality, discouragement, a sleeping disorder, loss of hunger, or even migraines. They may trust that they fizzled the relationship. They have additionally been known to be embarrassed and not enabling others to know precisely what had transpired. In pretty much every instance of Domestic Violence, ladies have expressed that they have lost their confidence and absence of certainty. Ladies have likewise been known to have outrage and dread towards themselves and their abuser. They are additionally known to segregate themselves from other, for example, family and companions (Women's Web, The Effect of Abuse). As indicated by Direnfeld (2007), the outcome of enthusiastic and mental can keep going for quite a while or even lifetime. It influences the casualty as well as other relatives and later connections. Much of the time, youngsters have the injury of the savagery. These kids develop to end up spooks in their own particular right whose conduct the damaged parent can't control and whose conduct is strengthened by the culprit. There are numerous things that a casualty needs to recollect, it's difficult to do everything without a moment's delay. Between the police, and safe houses, the casualty has other they can converse with; rather it is an advisor or even somebody that has experienced it. There primary concern they have to know what are their rights? References Direnfeld, G. MSW, RSW (2007). Alumbo, the Long Arm Of Domestic Violence. Recovered July 24, 2009 from http://www.alumbo.com/article/32544-The-Long-Arm-Of-Domestic-Violence.html Government Gazett (2006). Aggressive behavior at home Bill, 2006. Recovered July 22, 2009 from http://www.kubatana.net/docs/legisl/dom_viol_bill_060630.pdf Help control (2008). Aggressive behavior at home and Abuse: Help, Treatment, Intervention, and Prevention Retrieved July 24, 2009 from http://www.alumbo.com/article/32544-The-Long-Arm-Of-Domestic-Violence.html Michigan Prosecuting Attorney Associations (2008). Casualty Rights. Recovered July 20, 2009 from http://www.michiganprosecutor.org/Victim.htm Michigan State Police (2009). Abusive behavior at home Awareness. Recovered July 20, 2009 from http://www.michigan.gov/msp/0,1607,7-123-1589_1711_4577 - ,00.html Ladies Web (2009). Abusive behavior at home, The Effect of Abuse. Recovered July 25, 2009 from http://www.womensweb.ca/brutality/dv/effects.php Ladies Web (2009). Abusive behavior at home, Getting Help. Recovered July 25, 2009 from http://www.womensweb.ca/brutality/dv/h>GET ANSWER