INCOME is regressed on years of schooling (EDUC). The regression equation indicates that each additional year of schooling increases income by $1,200 and persons with no schooling have an income of $300. Which of the following is the correct regression equation?
A) INCOME = 300 − 1200(EDUC)
B) INCOME = 300 + 1200(EDUC)
C) INCOME = 1200 + 300(EDUC)
D) INCOME = 1500(EDUC)

Question

Quizplus · Accepted Answer

According to the information given, the regression equation is:
INCOME = a + b(EDUC)
where a is the income for persons with no education and b is the increase in income per year of schooling. 
From the information given, we know that a = $300 and b = $1,200. 
Substituting these values into the regression equation gives:
INCOME = $300 + $1,200(EDUC) 
which corresponds to choice (B).

INCOME Is Regressed on Years of Schooling (EDUC)