The following data give the starting salary for students who

The following data give the starting salary for students who recently graduated from a local university and accepted jobs soon after graduation. The stalling salary. grade-point average (GPA). and major (business or other) are provided. (a) Using a computer. develop a regression model that could be used to predict starting salary based on GPA and major. Please write down the regression equation. (b) Use this model to predict the starting salary for a business major with a GPA of 3.7. (c) What does the model say about the starting salary for a business compared to a nonbusiness major? (d) Do you believe this model is useful in predicting the starting salary? Justify your answer. using information provided in the computer output.

Solution

Consider the table

Thus, the regression equation is

Salary = 23419.59589+4072.453372GPA+3125.848876major [ANSWER]

Where major = 0 if Other, 1 if business.

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B)

If GPA = 3.7, major = 1,

Salary = 41613.52 [ANSWER]

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c)

As the coefficient for major is positive, then it says that business majors have GREATER starting salary than non-business majors.

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d)

As we see, the P values of the intercept and coefficients are all less than 0.05. So yes, this model is useful.

SUMMARY OUTPUT
Regression Statistics
Multiple R	0.846083
R Square	0.715857
Adjusted R Square	0.652714
Standard Error	2087.781
Observations	12
ANOVA
	df	SS	MS	F	Significance F
Regression	2	98833030	49416515	11.33711	0.003475
Residual	9	39229470	4358830
Total	11	1.38E+08
	Coefficients	Standard Error	t Stat	P-value	Lower 95%	Upper 95%	Lower 95.0%	Upper 95.0%
Intercept	23419.6	4129.567	5.671199	0.000305	14077.87	32761.33	14077.87	32761.33
GPA	4072.453	1369.712	2.973219	0.015621	973.95	7170.957	973.95	7170.957
major	3125.849	1288.953	2.425107	0.038289	210.0344	6041.663	210.0344	6041.663