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

question 117

Essay

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 S = 42.6 R−Sq = 30.9% ANALYSIS OF VARIANCE ​ ​
-{Incomes of Physicians Narrative} Estimate the annual income for a general practitioner with 15 years of experience.

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Definitions:

Contribution Margin Ratio

The proportion of sales revenue that exceeds variable costs, indicating how much revenue contributes to fixed costs and profit.

Margin of Safety Percentage

A financial ratio indicating the difference between actual sales and break-even sales, used to determine the risk of incurring a loss.

Break-even Sales

The level of sales at which a business neither makes a profit nor a loss, calculated by dividing fixed costs by the contribution margin ratio.

Total Sales

The overall revenue generated from goods or services sold by a business in a specific period.