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Suppose you have information on which of the 13 randomly selected teenage workers in the fast-food industry worked part-time and which worked 48 full-time. Variable Fi is equal to 1 if the worker is employed full-time, and it is equal to zero otherwise. With this information, you estimate the following relationship between wages, age, and full-time employment:
Wi = -0.5 + 0.25 Ai + 0.75 Fi
(.10) (.20) (the standard errors are in parentheses).
a. How much is a 20-year-old who works full-time predicted to earn based on this estimate?
b. How much is a 20-year-old who works part-time predicted to earn based on this estimate?
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