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Interpret the Slope and the Y-Intercept of the Least-Squares Regression

Question 88

Multiple Choice

Interpret the Slope and the y-intercept of the Least-Squares Regression Line
-Each year a nationally recognized publication conducts its "Survey of America's Best Graduate and Professional Schools." An academic advisor wants to predict the typical starting salary of a graduate at a top business school using GMAT score of the school as a predictor variable. Total GMAT scores range from 200 to 800. A simple linear regression of SALARY versus GMAT using 25 data points shown below.
β0^=92040β^1=228 s=3213R2=0.66r=0.81df=23t=6.67\hat { \beta _ { 0 } } = - 92040 \hat { \beta } 1 = 228 \mathrm {~s} = 3213 \mathrm { R } ^ { 2 } = 0.66 \mathrm { r } = 0.81 \mathrm { df } = 23 \mathrm { t } = 6.67
Give a practical interpretation of β0^=92040\hat { \beta _ { 0 } } = - 92040 .


A) The value has no practical interpretation since a GMAT of 0 is nonsensical and outside the range of the sample data.
B) We expect to predict SALARY to within 2(92040) =$184,0802 ( 92040 ) = \$ 184,080 of its true value using GMAT in a straight-line model.
C) We estimate SALARY to decrease $92,040\$ 92,040 for every 1 -point increase in GMAT.
D) We estimate the base SALARY of graduates of a top business school to be $92,040\$ - 92,040 .

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