Question

History Bookmarks Window Help 781.2018 T3 Questions Bank.pdt (page 7 of 9) Question 5 A statistician is interested in the relationship between the salary of graduates from a Master program at a university and the number of years after their graduation. Using data from a random survey with recent graduates, he performed the following simple linear regression model: where the dependent variable (Y) is the salary of the graduates (measured in thousands of Australian dollars); the explanatory variable (X) is the number of years after graduation; Bo and Bi are unknown parameters; and e is the disturbance term. The regression results are given in the following Table. Table: Excel Output for Linear Regression Model Regression Statistics R Square Standard Error Observations 0.8643 9.4531 30 Standard CoefficientsError t StatP-value Intercept Years 40.73 6.42 3.62 0.4813.350.00 1124 0.00 a) What conclusions can you reach about the relationship between salary and number of years after graduation? b) What is the predicted salary for a person in the survey in 2012, who graduated from the Master program in 2008? Comment briefly on how safe you think it is to rely on this prediction. c) Find and interpret the value of the standard error of the estimate. d) What assumptions have been employed in order to obtain these regression results

Answer 1