QUESTION 2
The variables in our dataset include the college grade point average (colGPA), high school
GPA (hsGPA), and achievement test score (ACT) for a sample of 141 students from a large
university; both college and high school GPAs are on a four- point scale. We estimate the
following model by OLS:
colGPA=\beta_1 + \beta_2 hsGPA + \beta_3 ACT + u,
and obtain the following parameter estimates \beta_1=1, \beta_2=0.5, and \beta_3=0.02. Predict difference
of college GPA's of two students (colGPA_B-colGPA_A) where the student B has a 0.4 higher
GPA in high school and 5 points higher ACT score compared to student A.
a. 0.15
b. 0.20
c. 0.25
d. 0.30