Economic Regression

The questions inside need to be drawn, so that the handwriting can be photographed on paper and sent to me.

ECON106 TPS iv 1 Flat Tire When I ride my bike from my house to my office, the trip is 8 miles long. Assume that I am equally likley to get a flat tire at any point on my ride. Let X denote the distance away from my office on my ride to work. a) Draw the probability density function, f(x), for me getting a flat tire on my way to work at a distance x away from my office. Be sure to label the height of f(x). b) What’s the probability that a given flat tire happens within a half mile of my house? c) What’s the probability that a given flat tire happens within a half mile of my office? d) Assume that if I get a flat I’ll either walk back home or walk to my office. What’s the probability that I’ll have to walk more than 1 mile if I get a flat tire? 2 Multiple Choice If Φ(z) = 0.8888, then what is the probability that Z > −z + 0.1? a) .0934 b) .1314 c) .1867 d) .8133 e) .8686 f) .9066 ECON 106 TPS Page 2 3 Big Spenders Data were collected on how much money people make and how much they spend. Afterward, the mean of each variable was subtracted from every observation. People with a positive value for spending are denoted Big Spenders and are members of the set BS while Small Spenders are members of the set SS. People with a positive value for making money are members of the set BM while people with a negative value for making money are members of the set SM. a) Draw a Venn diagram representing the sets BS and BM if there is a strong, positive correlation between how much money people make and how much they spend. b) Draw a Venn diagram representing the sets BS and BM if there is a strong, negative correlation between how much money people make and how much they spend.