A social scientist would like to analyze the relationship between educational at

Question

A social scientist would like to analyze the relationship between educational attainment and salary. He collects the following sample data, where Education refers to years of higher education and Salary is the individual's annual salary in thousands of dollars: Find the sample regression equation for the model: Salary = beta_0 + beta_1 Education + epsilon. (Round intermediate calculations to 4 decimal places. Enter your answers in thousands rounded to 2 decimal places.) Interpret the coefficient for education. As Education increases by 1 unit, an individual's annual salary is predicted to increase by $8,500. As Education increases by 1 unit, an individual's annual salary is predicted to increase by $9,500. As Education inceases by 1 unit, an individual's annual salary is predicted to decrease by $9,500. As Education increases by 1 unit, an individual's annual salary is predicted to decrease by $8,500. What is the predicted salary for an individual who completed 7 years of higher education? (Round intermediate coefficient values to 2 decimal places and final answer, in dollars, to the nearest whole number.)

Explanation / Answer

a)

Using technology, we get              
              
slope =    8.5          
intercept =    23.5          
              
Thus, the regression line is              
              
Salary^ =    23.5 + 8.5*Education [ANSWER]

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b)

By definition of slope, it is the increase in Y variable when the X variable increases by 1 unit.

Hence, as slope = 8.5,

OPTION A. [ANSWER]

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c)

As
              
Salary^ =    23.5 + 8.5*Education

If Education = 7

Then

Salary^ = 23.5 + 8.5*7 = 83 thousand = $ 83000 [ANSWER]

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