Question

Solve the problem. An academic advisor wants to predict the typical starting salary of a graduate at a top business school using the GMAT score of the school as a predictor variable. A simple linear regression of SALARY versus GMAT using 25 data points is shown below.

0 = -92040 1 = 228 s = 3213 df = 23 t = 6.67

Set up the null and alternative hypotheses for testing whether a linear relationship exists between SALARY and GMAT.

Answer 1

Let  $\beta$ be the regression coefficient of GMAT on SALARY.

So

Null hypothesis:

$H_0:\beta =0$

vs

Alternative hypothesis:

$H_1:\beta \neq 0$

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