SCENARIO 17-11 A Logistic Regression Model Was Estimated in Order to Predict

question 116

Multiple Choice

SCENARIO 17-11
A logistic regression model was estimated in order to predict the probability that a randomly chosen
university or college would be a private university using information on mean total Scholastic
Aptitude Test score (SAT) at the university or college, the room and board expense measured in
thousands of dollars (Room/Brd) , and whether the TOEFL criterion is at least 550 (Toefl550 = 1 if
yes, 0 otherwise.) The dependent variable, Y, is school type (Type = 1 if private and 0 otherwise) .
The Minitab output is given below:
-Referring to Scenario 17-11, which of the following is the correct interpretation for the SAT slope coefficient?

• A) Holding constant the effect of the other variables, the estimated mean value of school type increases by 0.015 for each increase of one point in average SAT score.
• B) Holding constant the effect of the other variables, the estimated school type increases by 0.015 for each increase of one point in average SAT score.
• C) Holding constant the effect of the other variables, the estimated probability of the school being a private school increases by 0.015 for each increase of one point in mean SAT Score.
• D) Holding constant the effect of the other variables, the estimated natural logarithm of the odds ratio of the school being a private school increases by 0.015 for each increase of one Point in mean SAT score.

---

Definitions:

Equilibrium Price

The price at which the quantity of goods suppliers are willing to produce equals the quantity of goods consumers are willing to buy.

Normal Profit

The minimum level of profit necessary for a company to remain competitive in the market, covering opportunity costs but not generating economic profit.

Market Equilibrium

The state in which market supply and demand balance each other, and, as a result, prices become stable.

Economic Profit

The difference between a firm's total revenue and its total costs, including both explicit and implicit costs, reflecting the true profitability of the firm.