A Study of the Top 75 MBA Programs Attempted to Predict

question 3

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 Predictor
$\begin{array} { l r c c l } \text { Variables } & \text { Coefficient } & \text { Std Error } & \text { T } & \text { P } \\ \text { Constant } & 18.1849 & 10.3336 & 1.76 & 0.0826 \\ \text { Size } & 1.47494 & 0.14017 & 10.52 & 0.0000 \end{array}$

R-Squared $\quad 0.6027 \quad$ Resid. Mean Square (MSE) $532.986$
Adjusted R-Squared $0.5972$ Standard Deviation $23.0865$ 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 $123,390 and $134,220.
• 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 $82,476 and $175,130.
• 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 $123,390 and $134,220.
• 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 $82,476 and $175,130.

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Definitions:

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A market structure characterized by many firms selling products that are similar but not identical, allowing for competition on factors other than price.

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A market structure characterized by a large number of sellers offering identical or very similar products, with no single seller able to influence prices.

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