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A College Admissions Officer Proposes to Use Regression to Model x1= high school GPA x2= SAT score \begin{array} { l } x _ { 1 } = \text { high school GPA } \\x _ { 2 } = \text { SAT score }\end{array}

question 82

Essay

A college admissions officer proposes to use regression to model a student's college GPA at graduation in terms of the following two variables: x1= high school GPA x2= SAT score \begin{array} { l } x _ { 1 } = \text { high school GPA } \\x _ { 2 } = \text { SAT score }\end{array}
The admissions officer believes the relationship between college GPA and high school GPA is linear and the relationship between SAT score and college GPA is linear. She also believes that the relationship between college GPA and high school GPA depends on the student's SAT score. She proposes the regression model:
E(y)=β0+β1x1+β2x2+β3x1x2E ( y ) = \beta _ { 0 } + \beta _ { 1 } x _ { 1 } + \beta _ { 2 } x _ { 2 } + \beta _ { 3 } x _ { 1 } x _ { 2 } Explain how to determine if the relationship between college GPA and SAT score depends on the high school GPA.


Definitions:

Incremental Manufacturing Cost

The additional cost incurred to produce an extra unit of a product.

Contribution Format Income Statement

A format for income statements that divides fixed and variable expenses, emphasizing the margin of contribution.

Traditional Format Income Statement

A type of income statement where expenses are deducted from revenues to calculate net income, typically divided into operating and non-operating sections.

Fixed Selling Expense

refers to selling costs that do not vary with the volume of sales, including salaries of sales personnel and advertising expenses.

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