Instructions
• DO NOT discuss the contents of this exam with your classmates.
• This exam is open book.
• Justify your answers whenever possible to ensure full credit. Be clear and to the point.
• You should turn in your exam and R codes to NYU classes.
• There are three questions worth 72 points in total.
Honor Code
In submitting this exam, you are agreeing to be bound by the NYU College of Arts and Science
Honor Code, the first part of which reads:
As a student in the College, I pledge that I shall perform honestly all my academic
obligations. I will not represent the words, works, or ideas of others as my own; will not
cheat; and will not seek to mislead faculty or other academic officers in their evaluation
of my course work or in any other academic affairs.
Any student who is found to have infracted the terms of the Honor Code will be dealt with in accordance with CAS policies; see https://cas.nyu.edu/academic-programs/bulletin/policies/
academic-policies.html#5. Do not take this lightly: students in the past who I have found in
violation of the terms of the Honor Code have been referred for disciplinary action to the Director
of Undergraduate Studies and the Dean for Students.
Question 1. (40 points)
An Engel curve describes how a household’s expenditure share for a category of goods or services
varies as a function of total household expenditure. Engel curves are used by policy analysts to
evaluate the effects of various consumption and commodity taxes on households.
In this question you will estimate Engel curves for an expenditure category using data collected as
part of the British Family Expenditure Survey. The file engel.csv contains data on the following
variables for a sample of British households:
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