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Let kids denote the number of children ever born to a woman, and let educ denote years of education for the woman. A simple model relating fertility to years of education is kids = B0 +B1 * educ + u where u is the unobserved error.
(i) What kinds of factors are contained in u? Are these likely to be correlated with level of education?
(ii) Will a simple regression analysis uncover the ceteris paribus effect of education on fertility? Explain.
Price/Feeder Quantity Demanded Quantity Supplied $300 500 1800 270 600 1700 240 700 1600 210 800 1500 180 1000 1400 150 1100 1300 120 1200 1200 90 1300 1100 60 1400 1000 30 1500 90
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Indicate whether each of the following statements is true, false, or uncertain, and explain your answer. Your grade will depend primarily on the quality of your explanation.
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