Use Indicator (Dummy) Variables in Multiple Regression A) That the Annual Average Bonus Is $605

question 4

Multiple Choice

Use indicator (dummy) variables in multiple regression.
-A sample of 30 companies was randomly selected for a study investigating what
Factors affect the size of company bonuses. Data were collected on the number of
Employees at the company and whether or not the employees were unionized (1 = yes,
0 = no) . The following multiple regression model was fit to the data. The correct
Interpretation of the regression coefficient of Union is $$\begin{array}{l}\text { Dependent Variable is Average Annual Bonus }\\\\\begin{array} { l r r r r } \text { Predictor } & \text { Coef } & \text { SE Coef } & \text { T } & \text { P } \\\text { Constant } & 347.9 & 872.2 & 0.40 & 0.693 \\\text { Employees } & 0.6547 & 0.1105 & 5.92 & 0.000 \\\text { Union } & 1259.5 & 605.8 & 2.08 & 0.047\end{array}\end{array}$$

• A) that the annual average bonus is $605.80 less, on average, for unionized companies compared to non-unionized companies of the same size (same number of employees).
• B) that the annual average bonus is $605.80 more, on average, for unionized companies compared to non-unionized companies of the same size (same number of employees).
• C) that the annual average bonus is $1259.50 less, on average, for unionized companies compared to non-unionized companies of the same size (same number of employees).
• D) that the annual average bonus is $1259.50 more, on average, for unionized companies compared to non-unionized companies of the same size (same number of employees).
• E) that the annual average bonus is $208 more, on average, for unionized companies

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Definitions:

Ancestral Characters

See shared ancestral characters.

Maximum Likelihood

A statistical method for estimating the parameters of a model, where the estimated parameters maximize the likelihood of observing the given sample data.

Systematists

Scientists who study the diversity of life and the evolutionary relationships between organisms, classifying them into a systematic framework.

Probability

A measure of the likelihood of a particular event or outcome occurring, expressed as a number between 0 and 1.