ADDIS ABABA UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF ECONOMICS

Econ 2060: Econometrics I

Assignment 1

1: A sample of 50 persons (20 male and 30 females) read two kinds of newspapers (26 English
and 24 Amharic). The distribution of this is tabulated below.
English newspaper Amharic newspaper
Male 16 4
Female 10 20
Total 26 24

a) If a person selects one of these persons at random, what is the probability that he gets one who
reads an English newspaper?

b) If a person selects a male, what is the probability that he is a person that reads English
newspaper?

c) Find the probability a female will read an English newspaper.

2. The joint probability distribution of X and Y is given as follows:

Y
X 0 1 2
0 1/6 2/9 1/36
1 1/3 1/6 0
2 1/12 0 0

a) Find the marginal probability distribution of X and Y; that is, find f(x) and f(y)

b) Find f (y|X = x) and find f (x|Y = y)

c) Obtain. E(X), E(Y), Var(X), Var(Y), Cov(X,Y) and E(Y|X)

3. The table below shows data on the number of cigarettes that mothers smocked during
pregnancy (X) and the weight of their child at birth

1
We would like to obtain the effects of smoking on the birth weight with the following regression
equation

= + +

Where Y is weight of child at birth and X is the number of cigarettes the mother smocked per
day during her pregnancy.

i Kg (Y) cigs (X) XY X2 X- Y- xy x2 e

1 3.06 0
2 4.99 0
3 2.52 3
4 2.86 3
5 2.47 5
6 2.49 5
7 2.24 10
8 2.44 10
9 1.70 20
10 1.81 20

The table helps you to obtain the intermediate results. The last 2 columns are to be filled with the
answers for item c) below.

a) Cross tabulate (draw the graph) of Y and X (It would be good if you could use a squared paper!

b) Obtain the sample estimates and

c) Obtain and (that is, the predicted values and the residuals for each observation