A Study of the Top 75 MBA Programs Attempted to Predict

question 60

Multiple Choice

A study of the top 75 MBA programs attempted to predict the average starting salary (in $1000's) of graduates of the program based on the amount of tuition (in $1000's) charged by the program. The results of a simple linear regression analysis are shown below: Least Squares Linear Regression of Salary

$\begin{array} { l r c c l }\text { Predictor}\\ \text { Variables } & \text { Coefficient } & \text { Std Error } & \mathbf { T } & \mathbf { P } \\ \text { Constant } & 18.1849 & 10.3336 & 1.76 & 0.0826 \\ \text { Size } & 1.47494 & 0.14017 & 10.52 & 0.0000 \\ & & & \\ \text { R-Squared } & 0.6027 & \text { Resid. Mean Square (MSE) } & 532.986 \\ \text { Adjusted R-Squared } &0.5972 & \text { Standard Deviation } & 23.0865 \end{array}$

The model was then used to create 95% confidence and prediction intervals for y and for E(Y) when the tuition charged by the MBA program was $75,000. The results are shown here:

95% confidence interval for E(Y) : ($123,390, $134,220)
95% prediction interval for Y: ($82,476, $175,130)

Which of the following interpretations is correct if you want to use the model to estimate E(Y) for all MBA programs?

• A) We are 95% confident that the average starting salary for graduates of a single MBA program that charges $75,000 in tuition will fall between $82,476 and $175,130.
• B) We are 95% confident that the average starting salary for graduates of a single MBA program that charges $75,000 in tuition will fall between $123,390 and $134,220.
• C) We are 95% confident that the average of all starting salaries for graduates of all MBA programs that charge $75,000 in tuition will fall between $82,476 and $175,130.
• D) We are 95% confident that the average of all starting salaries for graduates of all MBA programs that charge $75,000 in tuition will fall between $123,390 and $134,220.

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Definitions:

Thirty Years' War

A devastating conflict in Central Europe between 1618 and 1648, involving many of the great European powers, that was primarily fought over religious and territorial disputes.

Soldiers

Individuals who serve in an army and are specifically trained and equipped to fight on behalf of a state or country in military engagements.

Treaty of Westphalia

The Treaty of Westphalia, signed in 1648, ended the Thirty Years' War in Europe, marking the beginning of the modern state system by recognizing the sovereignty of nations.

Royal Authority

The power and right of a monarch to rule a kingdom or empire, typically involving the exercise of sovereignty, law-making, and governance.