An Academic Advisor Wants to Predict the Typical Starting Salary $$\hat { \beta } _ { 0 } = - 92040 \hat { \beta } 1 = 228 \quad s = 3213 \quad \mathrm { df } = 23 \quad t = 6.67$$

question 75

Multiple Choice

An academic advisor wants to predict the typical starting salary of a graduate at a top business school using the GMAT score of the school as a predictor variable. A simple linear regression of
SALARY versus GMAT using 25 data points is shown below. $$\hat { \beta } _ { 0 } = - 92040 \hat { \beta } 1 = 228 \quad s = 3213 \quad \mathrm { df } = 23 \quad t = 6.67$$
Set up the null and alternative hypotheses for testing whether a linear relationship exists between SALARY and GMAT.

• A) \(H _ { 0 } : \beta _ { 1 } > 0\) vs. \(\mathrm { H } _ { \mathrm { a } } : \beta _ { 1 } < 0\)
• B) \(H _ { 0 } : \beta _ { 1 } = 0\) vs. \(H _ { \mathrm { a } } : \beta _ { 1 } \neq 0\)
• C) \(H _ { 0 } : \beta _ { 1 } = 0\) vs. \(H _ { \mathrm { a } } : \beta _ { 1 } > 0\)
• D) \(H _ { 0 } : \hat { \beta } 1 = 228\) vs. \(H _ { \mathrm { a } } : \hat { \beta } _ { 1 } > 228\)

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Definitions:

Cost Behavior Analysis

The study of how specific costs respond to changes in the level of business activity.

Activity Base

A measure used in costing that is a significant and quantifiable activity or event, determining the cost incurred by an activity.

Level Of Activity

A measure of the volume of production or work that a business operates at, which can affect costs and efficiency.

Variable Costs

Expenses that vary directly with the amount of production or the degree of business operations.