Suppose that the estimated regression equation of a College of Business graduates is given by: = 32,000 + 4,000x + 1,800D,where y is the starting salary,x is the grade point average and D is a dummy variable which takes the value of 1 if the student is a finance major and 0 if not.An accountancy major graduate with a 3.5 grade point average would have an average starting salary of:
A)$47,800
B)$46,000
C)$37,800
D)$32,000

Question

Suppose that the estimated regression equation of a College of Business graduates is given by:  = 32,000 + 4,000x + 1,800D,where y is the starting salary,x is the grade point average and D is a dummy variable which takes the value of 1 if the student is a finance major and 0 if not.An accountancy major graduate with a 3.5 grade point average would have an average starting salary of:
A)$47,800 
B)$46,000 
C)$37,800 
D)$32,000

Quizplus · Accepted Answer

Plug in the given values in the estimated regression equation: 
Salary = 32,000 + 4,000(3.5) + 1,800(0) 
Salary = 32,000 + 14,000 
Salary = $46,000

Therefore, the answer is B) $46,000.

Suppose That the Estimated Regression Equation of a College of Business