Question: Consider the following model: Yi = B0 + B1Xi + B2D2i + B3D3 + ui where Y = annual earnings of MBA graduates X =

Consider the following model:
Yi = B0 + B1Xi + B2D2i + B3D3 + ui
where Y = annual earnings of MBA graduates
X = years of service
D2 = 1 if Harvard MBA
= 0 if otherwise
D3 = l if Wharton MBA
= 0 if otherwise
a. What are the expected signs of the various coefficients?
b. How would you interpret B2 and B3?
c. If B2 > B3, what conclusion would you draw?

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