(Situation P) Below Are the Results of a Survey of America's

question 38

Multiple Choice

(Situation P) Below are the results of a survey of America's best graduate and professional schools. The top 25 business
schools, as determined by reputation, student selectivity, placement success, and graduation rate, are listed in the table.
For each school, three variables were measured: (1) GMAT score for the typical incoming student; (2) student acceptance
rate (percentage accepted of all students who applied) ; and (3) starting salary of the typical graduating student. $$\begin{array} { l l l l l } & \text { School } & \text { GMAT } & \text { Acc. Rate } & \text { Salary } \\\hline \text { 1. } & \text { Harvard } & 644 & 15.0 \% & \$ 63,000 \\\text { 2. } & \text { Stanford } & 665 & 10.2 & 60,000 \\\text { 3. } & \text { Penn } & 644 & 19.4 & 55,000 \\\text { 4. } & \text { Northwestern } & 640 & 22.6 & 54,000 \\\text { 5. } & \text { MIT } & 650 & 21.3 & 57,000 \\\text { 6. } & \text { Chicago } & 632 & 30.0 & 55,269 \\\text { 7. } & \text { Duke } & 630 & 18.2 & 53,300 \\\text { 8. } & \text { Dartmouth } & 649 & 13.4 & 52,000 \\\text { 9. } & \text { Virginia } & 630 & 23.0 & 55,269 \\\text { 10. } & \text { Michigan } & 620 & 32.4 & 53.300 \\\text { 11. } & \text { Columbia } & 635 & 37.1 & 52,000 \\\text { 12. } & \text { Cornell } & 648 & 14.9 & 50,700 \\\text { 13. } & \text { CMU } & 630 & 31.2 & 52,050 \\\text { 14. } & \text { UNC } & 625 & 15.4 & 50,800 \\\text { 15. } & \text { Cal-Berkeley } & 634 & 24.7 & 50,000 \\\text { 16. } & \text { UCLA } & 640 & 20.7 & 51,494 \\\text { 17. } & \text { Texas } & 612 & 28.1 & 43,985 \\\text { 18. } & \text { Indiana } & 600 & 29.0 & 44,119 \\\text { 19. } & \text { NYU } & 610 & 35.0 & 53,161 \\\text { 20. } & \text { Purdue } & 595 & 26.8 & 43,500 \\\text { 21. } & \text { USC } & 610 & 31.9 & 49,080 \\\text { 22. } & \text { Pittsburgh } & 605 & 33.0 & 43,500 \\\text { 23. } & \text { Georgetown } & 617 & 31.7 & 45,156 \\\text { 24. } & \text { Maryland } & 593 & 28.1 & 42,925 \\\text { 25. } & \text { Rochester } & 605 & 35.9 & 44,499\end{array}$$ The academic advisor wants to predict the typical starting salary of a graduate at a top business school using GMAT
score of the school as a predictor variable. A simple linear regression of SALARY versus GMAT using the 25 data points
in the table are shown below. $$\beta _ { 0 } = - 92040 \quad \hat { \beta } _ { 1 } = 228 \quad s = 3213 \quad r ^ { 2 } = .66 \quad r = .81 \quad \mathrm { df } = 23 \quad t = 6.67$$
-For the situation above, give a practical interpretation of $\hat { \beta } _ { 0 } = - 92040$

• A) We expect to predict SALARY to within 2(92040) = $184,080 of its true value using GMAT in a straight-line model.
• B) We estimate SALARY to decrease $92,040 for every 1-point increase in GMAT.
• C) We estimate the base SALARY of graduates of a top business school to be -$92,040.
• D) The value has no practical interpretation since a GMAT of 0 is nonsensical and outside the range of the sample data.

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