Question

A regression model that showed a good fit was developed recently to predict average annual pay for companies based on the percentage of female employees. Companies included in the analysis had between​ 40% and​ 80% of employees who were female. This model could safely be used to estimate average annual pay for which of the following types of​ companies?

A. Companies owned and operated in the 18th century

B. Companies that will start-up in the next 20 years

C. Companies where​ 10% of employees are female

D.Companies where 3/4 of employees are female

Please give and explain the correct answer.

Answer 1

D.Companies where 3/4 of employees are female

Whenever we deal with regression models and estimating the dependent variable from the explanatory variable, we have to be careful about the range of the explanatory variable. Here the explanatory variable is the percentage of female employees. Companies included in the analysis had between​ 40% and​ 80% of employees who were female. This means that the range of the explanatory variable is 40-80% in which our predictions would be safe. if companies had 3/4 = 75% female population, then we can safely use the model in order to estimate the dependent variable - estimate average annual pay, since the explanatory variable lies within the safe range.

In none of the other options, we are getting that option.

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