Suppose that the estimated regression equation for 200 business graduates is ŷ = 20 000 + 2000x + 1500I,
Where y is the starting salary, x is the grade point average and I is an indicator variable that takes the value of 1 if the student is a computer information systems major and 0 if not. A business administration major graduate with a grade point average of 4 would have an average starting salary of:
A) $20 000.
B) $26 000.
C) $29 500.
D) $28 000.

Question

Quizplus · Accepted Answer

For a business administration major (I=0) with a GPA of 4, the salary is calculated as ŷ = 20,000 + 2000(4) + 1500(0) = $28,000.

Suppose That the Estimated Regression Equation for 200 Business Graduates