# A prediction equation for starting salaries

1. A prediction equation for starting salaries (in \$1,000s) and SAT scores was performed using simplelinear regression. In the regression printout shown below, what can be said about the overall validityof the model at a level of significance of 5% ?SAT is not a good predictor for starting salary.The significance level for SAT indicates the slope is not equal to zero.None of the alternatives are correct.The significance level for the intercept indicates the model is not valid.The significance level for SAT indicates the slope is equal to zero.2. A prediction equation for sales and payroll was performed using simple linear regression. In theregression printout shown below, which of the following statements is/are not true?Payroll is the independent variable.There is evidence of a positive linear relationship between Sales and Payroll based on ? =0.05.Payroll is a good predictor of Sales based on ? = 0.05.The coefficient of determination is equal to 0.833333.Payroll is not a good predictor of Sales based on ? = 0.01.3. Which of the following statements provides the best guidance for model building?If the value of r2 increases as more variables are added to the model, the variables shouldremain in the model, regardless of the magnitude of increase.If the value of the adjusted r2 increases as more variables are added to the model, thevariables should remain in the model.If the value of r2 increases as more variables are added to the model, the variables should notremain in the model, regardless of the magnitude of the increase.If the value of the adjusted r2 increases as more variables are added to the model, thevariables should not remain in the model.None of the statements provide accurate guidance.4. The condition of an independent variable being correlated to one or more other independentvariables is referred to asmulticollinearity.statistical significance.The significance level for the F-test is not valid.autocorrelation.heteroscedasticity.5. Shop-Mart Inc Study: Shopmart Inc, a large department store, has collected the followingmonthly data on lost sales revenue due to theft and the number of security guard hours on duty:Lost SalesRevenue(\$000s)1.01.41.81.9TotalSecurityGuard hours1350130012001000Lost SalesRevenue(\$000s)2.02.12.3TotalSecurityGuard hours950630600With regards, to Shop-Mart Inc Study , it can be concluded that _____ % of the lost salesrevenue is explained by the number of security guard hours.22.25%88.97%75%79.17%6. With regards to the Bob-White-Study-I resultsEach additional family member increases the predicted costs by how much?\$110.47\$35.53\$16.83\$168.37. With regards to the Bob-White-Study-I resultsWhat percent of the variation in medical expenses is explained by the size of the family?69.5%47.4%48.3%55.27%8. Bob-White-Study-II: Bob White is conducting research on monthly expenses for medical care,including over the counter medicine. His dependent variable is monthly expenses for medical carewhile his independent variables are number of family members (X1) and insurance type (governmentfunded, private insurance and other). He has coded insurance type as the following:X2 = 1 if government funded, X3 = 1 if private insuranceBelow is his Excel output.What is the prediction equation?Y = 144.91 + 11.63X1 – 13.70 X2 + 9.11X3Y = 144.91 + 11.63X1 + 13.70 X2 – 9.11X3Y = 144.91 + 11.63X1 + 13.70 X2 + 9.11X3Y = 144.91 + 11.63X1 – 13.70 X2 – 9.11X39. With regards to Bob-White-Study-II results,What percent of the variation in medical expenses is explained by the independent variables?85.9%73.79%95.23%71.82%10.With regards to Bob-White-Study-II resultsBased on his model, what are the predicted monthly expenses for a family of four with privateinsurance?\$952.36\$154.47\$203.06\$182.3211.With regards to Bob-White-Study-II resultsBased on his model, what are the predicted monthly expenses for a family of two withgovernment funded insurance?\$182.32\$154.47\$952.36\$203.0612.With regards to Bob-White-Study-II resultsBased on his model, what are the predicted monthly expenses for a family of five with noinsurance?\$182.32\$952.36\$154.47\$203.0613.With regards to Bob-White-Study-II resultsIf the model is used to predict actual monthly expenses, then the average prediction error will be\$154.47\$952.36\$203.06\$182.3214.With regards to Bob-White-Study-II results: the most important variable in predicting monthlyexpenses is:number of family membersmonthly expensesgovernment funded insuranceprivate insurance