(31pt) Starting salaries for accountants in Tampa follow those of many U.S. citi

Question

(31pt) Starting salaries for accountants in Tampa follow those of many U.S. cities. The table bellow shows starting salaries (in thousands of dollars) and the cost of living index for 5 metropolitan areas. A regression analysis will help provide explanation on how cost of living explains salary in the sample cities. Salary in 30 25 20 15 10 Thousands$ (Spt)What does the scatter diagram indicates about the relationship between Salary and Cost of living index? a. 20 40 60 80 b. (10pt)Use the least squares method (OLS) to develop an estimated regression equation for this problem calculate bo and bl Metropolitan area Index Salary 19 10 27 65- 29 20 21 Oklahoma City 46 48 50 Tampa Sacramento Honolulu 61 Mean 54

Explanation / Answer

Ans:

1)Scatterplot shows the positive correlation.

slope,b1=r*sy/sx=0.547*7.52/8.46=0.486

y-intercept,b0=(21-0.486*54)=-5.245

c)Regression equation

y=0.486x-5.245

d)As,Slope=0.486

if index increase by one unit,salary will increase by 0.486 units.

e)y-intercept=-5.245

salary=-5.245,when index=0

x y 1 46 19 2 48 10 3 50 27 4 65 29 5 61 20 mean= 54 21 std dev= 8.46 7.52 Corr. Coff.r= 0.547 Slope,b1= 0.486 intercept,b0= -5.245

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