Figure 1 shows Excel output estimating the following model S

Figure 1 shows Excel output estimating the following model:

Salary= ?0 + ?₁Male + ?₂Experience + ?₃Over50 + ?₄MBA + ?

Where, Salary = a person’s salary in thousands of dollars, Male = 1 if the person is a male (0 otherwise), Experience = number of years experience, Over50 = 1 if the person is over 50 (0 otherwise) and MBA =1 if the person has an MBA (0 otherwise).

Refer to Figure 1

Which of the following is the correct interpretation?

Select one:

a. An increase in experience of 1 year, results in an increase in the predicted salary of around $3,000.

b. A $3,000 increase in experience results in a 1 unit increase in salary.

c. Males earn around $2,000 more than Females for every additional year of experience they have.

d. MBAs make less money than non MBAs.

Refer to Figure 1

What percentage of the variation in salaries is explained by the regression equation?

Select one:

a. 91.3%

b. 76.5%

c. 85.6%

d. 42.3%

What is the total variation in salaries?

Select one:

a. 12,771

b. 1,108

c. 11,663

d. 55.41

Solution