Question

Assume Y= salary, X1 = years of education and X2 = years of experience. Write the multivariate regression equation showing that everyone will make $30K regardless of education or experience, will make $1K less for every year of education, and $5K more for every year of experience.

Answer 1

We have dependent variable = Y(salary)

and independent variables are X1(years of education) and X2(years of experience)

It is given that everyone will make $30K regardless of education or experience, so intercept of equation is 30,000 or 30k

It is given that everyoone will make $1K less for every year of education, so negative slope for X1 or -1000 for X1

It is given that everyoone will make $5K more for every year of experience, so positive slope for X2 or 5000 for X2

We know that the general equation is given as

Y = A + BX1 + CX2

where A is intercept = 30,0000, B is slope constant for X1 = -1000 and C is slope constant for X2 = 5000

setting the given values, we get

Salary = 30,000 -1,000(Years of education) + 5,000(years of experience)

This is the required multivariate regression equation