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Incomes of Physicians an Economist Is Analyzing the Incomes of Physicians (General

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Incomes of Physicians
An economist is analyzing the incomes of physicians (general practitioners,surgeons,and psychiatrists).He realizes that an important factor is the number of years of experience.However,he wants to know if there are differences among the three professional groups.He takes a random sample of 125 physicians and estimates the multiple regression model y = β0 + β1x1 + β2x2 + β3x3 + ε,where y = annual income (in $1,000),x1 = years of experience,x2 = 1 if physician and 0 if not,and x3 = 1 if surgeons and 0 if not.The computer output is shown below. THE REGRESSION EQUATION IS y = 71.65 + 2.07x1 + 10.16x2− 7.44x3  Incomes of Physicians  An economist is analyzing the incomes of physicians (general practitioners,surgeons,and psychiatrists).He realizes that an important factor is the number of years of experience.However,he wants to know if there are differences among the three professional groups.He takes a random sample of 125 physicians and estimates the multiple regression model y = β<sub>0</sub> + β<sub>1</sub>x<sub>1</sub> + β<sub>2</sub>x<sub>2</sub> + β<sub>3</sub>x<sub>3</sub> + ε,where y = annual income (in $1,000),x<sub>1</sub> = years of experience,x<sub>2</sub> = 1 if physician and 0 if not,and x<sub>3</sub> = 1 if surgeons and 0 if not.The computer output is shown below. THE REGRESSION EQUATION IS y = 71.65 + 2.07x<sub>1</sub> + 10.16x<sub>2</sub>− 7.44x<sub>3</sub>   S = 42.6 R−Sq = 30.9% ANALYSIS OF VARIANCE   ​ ​ -{Incomes of Physicians Narrative} Estimate the annual income for a psychiatrist with 15 years of experience. S = 42.6 R−Sq = 30.9% ANALYSIS OF VARIANCE  Incomes of Physicians  An economist is analyzing the incomes of physicians (general practitioners,surgeons,and psychiatrists).He realizes that an important factor is the number of years of experience.However,he wants to know if there are differences among the three professional groups.He takes a random sample of 125 physicians and estimates the multiple regression model y = β<sub>0</sub> + β<sub>1</sub>x<sub>1</sub> + β<sub>2</sub>x<sub>2</sub> + β<sub>3</sub>x<sub>3</sub> + ε,where y = annual income (in $1,000),x<sub>1</sub> = years of experience,x<sub>2</sub> = 1 if physician and 0 if not,and x<sub>3</sub> = 1 if surgeons and 0 if not.The computer output is shown below. THE REGRESSION EQUATION IS y = 71.65 + 2.07x<sub>1</sub> + 10.16x<sub>2</sub>− 7.44x<sub>3</sub>   S = 42.6 R−Sq = 30.9% ANALYSIS OF VARIANCE   ​ ​ -{Incomes of Physicians Narrative} Estimate the annual income for a psychiatrist with 15 years of experience. ​ ​
-{Incomes of Physicians Narrative} Estimate the annual income for a psychiatrist with 15 years of experience.


Definitions:

Leverage

The strategic use of financial instruments or borrowed capital, such as debt, to increase an investment's potential return.

Profitability

A measure of how efficient a company is at generating profits from its resources, often expressed in terms of margins or ratios.

EBIT

A financial metric called EBIT that calculates a company's profits prior to the deduction of interest and income tax costs, encompassing all other expenses.

Operating Leverage

A financial metric that measures the proportion of fixed costs in a company's cost structure, indicating how a change in sales volume will affect operating income.

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