Question

Solve the problem.

A study of the top 75 MBA programs attempted to predict the average starting salary (in $1000’s) of graduates of the program based on the amount of tuition (in $1000’s) charged by the program. The results of a simple linear regression analysis are shown below:

Least Squares Linear Regression of Salary

Predictor
Variables Coefficient Std Error T P
Constant 18.1849 10.3336   1.76 0.0826
Size   1.47494 0.14017   10.52 0.0000

R-Squared 0.6027 Resid. Mean Square (MSE) 532.986
Adjusted R-Squared 0.5972 Standard Deviation 23.0865

Interpret the estimated slope of the regression line.

		For every $1000 increase in the tuition charged by the MBA program, we estimate that the average starting salary will increase by $1474.94.
		For every $1474.94 increase in the tuition charged by the MBA program, we estimate that the average starting salary will increase by $18,184.90.
		For every $1000 increase in the tuition charged by the MBA program, we estimate that the average starting salary will decrease by $1474.94.
		For every $1000 increase in the average starting salary, we estimate that the tuition charged by the MBA program will increase by $1474.94.

Answer 1

From the output of the regression analysis to predict the average starting salary (in $1000's) of graduates of the program based on the tuition (in $1000's) charged by the program, the estimated regression equation is

Average starting salary = 18.1849 + 1.47494 Size

The estimated slope coefficient is 1.47494. It indicates that for every unit increase in tution , the starting salary will increase by 1.47494 on average. So the correct interpretation of the estimated slope of the regression line is the first option

For every $1000 increase in the tution charged by the MBA program, we estimate the average starting salary will increase by $1471.94.