6. The minimum legal drinking age in the United States is 21. Suppose we conduct a survey of students at URI. We collect data on their age (in months), the number of drinks they consumed in the last week, number of minutes of exercise in the last week, their body mass index (BMI), and other characteristics such as education, race, gender, class year, etc.

   1. Using this observational data, what would be an appropriate identification strategy if we are interested in estimating a causal effect of being legally allowed to drink (age >= 21) on: (1) number of drinks consumed in the last 7 days, (2) minutes of exercise in the last 7 days, and (3) BMI. Explain, in general, how the identification strategy works, and its assumptions. (10 points)

   2. Suppose we are interested in the effect of being legally allowed to drink (i.e. age >=21)on an individual’s BMI. Would you expect to find an effect of being legally allowed to drink on weight gain (measured by BMI) for individuals “very close” to age 21? Explain.

Following complaints about the working conditions in some apparel factories both in the United States and abroad, a join government and industry commission recommended in 1998 that companies that monitor and enforce proper standards be allowed to display a “No Sweat” label on their products. Does the presence of these labels influence consumer behavior? A survey of U.S. residents aged 18 or older asked a series of questions about how likel they would be to purchase a gament under various conditions. For some conditions, it was stated that the garment had a “No Sweat” label; for others, there was no mention of such a label. On the basis of the responses, each person was classified as a “label use” or a “label nonuser” there were 296 women surveyed. Of these, 63 were label users. On the other hand, 27 of 251 men were classified as users.

(a) Give a 95% confidence interval for the difference in the proportions.

(b) You would like to compare the women with the men. Set up appropriate hypotheses, and find the test staitistic and the P-value. What do you conclude?

Use Excel

The United States Department of Agriculture (USDA), in conjunction with the Forest Service, publishes information to assist companies in estimating the cost of building a temporary road for such activities as a timber sale. Such roads are generally built for one or two seasons of use for limited traffic and are designed with the goal of reestablishing vegetative cover on the roadway and adjacent disturbed area within ten years after the termination of the contract, permit, or lease. The timber sale contract requires out sloping, removal of culverts and ditches, and building water bars or cross ditches after the road is no longer needed. As part of this estimation process, the company needs to estimate haul costs. The USDA publishes variable costs in dollars per cubic-yard-mile of hauling dirt according to the speed with which the vehicle can drive. Speeds are mainly determined by the road width, the sight distance, the grade, the curves and the turnouts. Thus, on a steep, narrow, winding road, the speed is slow; and on a flat, straight, wide road, the speed is faster. Shown below are data on speed, cost per cubic yard for a 12 cubic yard end-dump vehicle, and cost per cubic yard for a 20 cubic yard bottom-dump vehicle. Use these data and simple regression analysis to develop models for predicting the haul cost by speed for each of these two vehicles. Discuss the strength of the models. Based on the models, predict the haul cost for 35 mph and for 45 mph for each of these vehicles.

Use Excel

The United States Department of Agriculture (USDA), in conjunction with the Forest Service, publishes information to assist companies in estimating the cost of building a temporary road for such activities as a timber sale. Such roads are generally built for one or two seasons of use for limited traffic and are designed with the goal of reestablishing vegetative cover on the roadway and adjacent disturbed area within ten years after the termination of the contract, permit, or lease. The timber sale contract requires out sloping, removal of culverts and ditches, and building water bars or cross ditches after the road is no longer needed. As part of this estimation process, the company needs to estimate haul costs. The USDA publishes variable costs in dollars per cubic-yard-mile of hauling dirt according to the speed with which the vehicle can drive. Speeds are mainly determined by the road width, the sight distance, the grade, the curves and the turnouts. Thus, on a steep, narrow, winding road, the speed is slow; and on a flat, straight, wide road, the speed is faster. Shown below are data on speed, cost per cubic yard for a 12 cubic yard end-dump vehicle, and cost per cubic yard for a 20 cubic yard bottom-dump vehicle. Use these data and simple regression analysis to develop models for predicting the haul cost by speed for each of these two vehicles. Discuss the strength of the models. Based on the models, predict the haul cost for 35 mph and for 45 mph for each of these vehicles.

1.     Suppose the United States economy is represented by the following equations:

Z = C + I + G            C = 100 + .Y_D                     T = 200                     I = 30

Y_D = Y - T                 G = 100

Suppose that the wage and price setting relations are given by

W = P^e(1-u)

P = (1+μ) W

a.      If P = P^e and the mark-up is 20% find the real wage

b.     Calculate the natural rate of unemployment

c.      Calculate the real wage and the natural rate of unemployment if the mark-up decreases to 10%

d.     Now if P ≠ P^e and P^e =105, but markup is still 20%, what unemployment rate is compatible with the price level = 100?

e.      Derive the aggregate supply if the production function is Y = N

A professor in the Computer Science department at United States Institute of Technology has just patented a new search engine technology and would like to sell it to you, an interested venture capitalist. The patent has a 17-year life. The technology will take a year to implement (there are no cash flows in the first year) and has an upfront cost of $100 million. You believe this technology will be able to capture 1% of the Internet search market, and currently this market generates profits of $1 billion per year. Over the next five years, the probability that profits will grow at 10% per year is 20% and the probability that profits will grow at 5% per year is 80%. This growth rate will become clear one year from now (after the first year of growth). After five years, profits are expected to decline 2% annually. No profits are expected after the patent runs out. The discount rate is 10%.

Calculate the NPV of undertaking the investment today. Express your answer in millions of $.

Many countries (including the United States and European countries) are forecast to have a severe drop in production this year.

a. In this context, do you think that in the coming months there will be an increase or decrease in adverse selection problems in commercial loans? Explain what are adverse selection problems and justify your answer.

b. How can an economic crisis affect a bank balance sheet? Will your bank capital increase or decrease? Explain your answers.

c. Could a lending crash in a country collapse during an economic recession? How? Explain your answer.

c2. What could the government of that country do to avoid it?

Health Law

In the United States, all medical malpractice law is litigated and resolved in one of two ways. Each state will choose which theory (only one theory is chosen to be used by each state) used to resolve all cases within their jurisdiction. The first is the theory of contributory negligence. In this theory, the original law (and ancient law derived from the Common law of England) states that, under this doctrine, if the patient contributed at all to the harm caused by the medical professional, then the patient was not entitled to any compensatory relief. In other words, no suit for damages would be allowed against the medical provider. This theory insisted that only a completely blameless patient should have recourse against a medical professional.

The second theory is the theory of comparative negligence. This is the more modern doctrine. Under comparative negligence all injured patients could still file a malpractice suit even if the patient contributed to the harm caused. Therefore, if a doctor was 50% at fault and the patient was 50% at fault, the patient could still recover 50% of the damages from the doctor.

Set forth two strengths and two weaknesses for each of these theories and choose which one you believe to be the most just and why.

The United States Bureau of Labor Statistics (BLS) conducts the Quarterly Census of Employment and Wages (QCEW) and reports a variety of information on each county in America. In the third quarter of 2016, the QCEW reported the total taxable earnings, in millions, of all wage earners in all 3222 counties in America. Suppose that James is an economist who collects a simple random sample of the total taxable earnings of workers in 52 American counties during the third quarter of 2016. According to the QCEW, the true population mean and standard deviation of taxable earnings, in millions of dollars, by county are ?=28.29 and ?=33.493 , respectively. Let ? be the total taxable earnings, in millions, of all wage earners in a county. The mean total taxable earnings of all wage earners in a county across all the counties in James' sample is ?⎯⎯⎯ . Use the central limit theorem (CLT) to determine the probability ? that the mean taxable wages in James' sample of 52 counties will be less than $29 million. Report your answer to four decimal places. ?(?⎯⎯⎯<29) P ( x ¯ < 29 ) = Use the CLT again to determine the probability that the mean taxable wages in James' sample of 52 counties will be greater than $26 $ 26 million. Report your answer to four decimal places. ?(?⎯⎯⎯>26) P ( x ¯ > 26 )

1. Here are the annual numbers of deaths from tornadoes in the United States from 1998 through 2011:

130    94    40    35    550    54    35    38    67    91    125    21    45    544

Find these statistics(i.e., show the formula and show your work):

a) mean

b) median and quartiles

c) range and IQR

Typed answer please.