Multiple Regression Analysis Was Used to Study How an Individual's

question 6

Essay

Multiple regression analysis was used to study how an individual's income (y in thousands of dollars) is influenced by age (x₁ in years), level of education (x₂ ranging from 1 to 5), and the person's gender (x₃ where 0 =female and 1=male). The following is a partial result of Excel output that was used on a sample of 20 individuals.

a.Compute the coefficient of determination.
b.Perform a t test and determine whether or not the coefficient of the variable "level of education" (i.e., x₂) is significantly different from zero. Let  = 0.05.
c.At  = 0.05, perform an F test and determine whether or not the regression model is significant.
d.As you note the coefficient of x₃ is -0.510. Fully interpret the meaning of this coefficient.

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Definitions:

Merchandise Purchases Budget

A financial plan that outlines the expected purchases of merchandise inventory over a certain period, considering anticipated sales and desired inventory levels.

Accounts Receivable

Outstanding payments from clients to a business for goods delivered or services rendered, awaiting settlement.

Accounts Payable

Money owed by a company to its creditors for goods and services that have been delivered or used but not yet paid for.

Accounts Payable

Money owed by a business to its suppliers shown as a liability on the company’s balance sheet.