Question

A survey of MBA graduates of a business school obtained data on the first-year salary after graduation and years of work experience prior to obtaining their MBA. The data are given in excel.

Q: Write out the assumptions of simple linear regression. Use the output to validate assumptions or indicate if an assumption is not met.

Experience	Salary
8	113.9
5	112.5
5	109
11	125.1
4	111.6
3	112.7
3	104.5
3	100.1
0	101.1
13	126.9
14	97.9
10	113.5
2	98.3
2	97.2
5	111.3
13	124.7
1	105.3
5	107
1	103.8
5	107.4
5	100.2
7	112.8
4	100.7
3	107.3
3	103.7
7	121.8
7	111.7
9	116.2
6	108.9
6	111.9
4	96.1
6	113.5
5	110.4
1	98.7
13	120.1
1	98.9
6	108.4
2	110.6
4	101.8
1	104.4
5	106.6
1	103.9
4	105
1	97.9
2	104.6
7	106.9
5	107.6
1	103.2
1	101.6
0	99.2
1	101.7
6	120.1

Answer 1

Bring data in to excel sheet. Data tab ==> choose regression statistics

Simple Linear Regression Summary output:

Conclusion:

Significance F (highlighted in yellow) is nothing but p - value

P-value < 0.05

If the p-value is less than 0.05, we reject the null hypothesis that there's no difference between the means and conclude that a significant difference does exist