The following data give the starting salary for students who recently graduated

Question

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.

Explanation / Answer

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

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