Flag Mike Jimenez is president of the teachers’ union for Preston School District. In preparing for upcoming negotiations, he would like to investigate the salary structure of classroom teachers in the district. He believes there are three factors that affect a teacher’s salary: years of experience, a rating of teaching effectiveness given by the principal, and whether the teacher has a master’s degree. A random sample of 20 teachers resulted in the following data. Salary Years of experience Principal’s Rating Master’s Degree
($ thousands)
52.1 8 35 1
43.6 5 43 0
40.3 2 51 0
53 15 60 1
48.6 11 73 0
57 14 80 1
52 9 76 1
46.8 7 54 0
58.6 21 55 1
42.8 3 90 0
36.7 1 30 0
40.6 5 44 0
61.8 23 84 1
56.7 17 76 1
48.4 12 68 0
53.6 14 25 1
51.8 8 90 1
41.7 4 62 0
42.8 2 80 0
52.8 8 72 1
*1 = yes, 0= no
a. What is the question being asked?
b. label your dependent variable
c. label all of your independent variables
d. Develop a correlation matrix. Which independent variable has the strongest correlation with the dependent variable? State the variable and the correlation coefficient.
e. Determine the regression equation
f. What salary would you estimate for a teacher with five years' experience, a rating by the principal of 60, and no master's degree?
Run a diagnosis to see if the model is significant at alpha = 0.05
g. State the null and alternate hypotheses
h. Find the critical value
i. Compute the value of the test statistic
j. What is your decision regarding the null hypothesis? Interpret the result.
k. Run a diagnosis to determine if the slope of the individual variables are significant at alpha = 0.05
Variable Test Statistic
Significant (Yes, No)
l. Is Multicollinearity a problem? Compute the VIF for each independent variable
Variable VIF value Problem? (Yes, No)