5.10 Exercises: Linear Model I

1a) For this simple linear regression, \[ \text{Income} = b_0 + b_1 \text{Years of Education} \] We find \(b_0\)=-4500, \(b_1\)=500 (in units of $/year). What does this mean? [Negative income?!]

1b) For this multiple linear regression, \[\text{Income} = b_0 + b_1 \text{Years of Education} + b_2 \text{Years of Experience}\] We find \(b_0\)=-3700, \(b_1\)=450, \(b_2\)=350 (in $/year). What do these mean?

1c) For this simple linear regression, \[\text{Income} = b_0 + b_1 \text{Gender}\] Let’s say Gender = 1 if Female, 0 if Male, and we find that \(b_0\)=3500, \(b_1\)=5 (in $). What does this mean?