A $95 \%$ prediction interval for SALARY when GMAT $= 600$ is $( \$ 37,915 , \$ 51,948 )$. Interpret this interval for the situation above.

A) We are $95 \%$ confident that the mean SALARY of all top business school graduates with GMATs of 600 will fall between $\$ 37,915$ and $\$ 51,984$.
B) We are $95 \%$ confident that the SALARY of a top business school graduate with a GMAT of 600 will fall between $\$ 37,915$ and $\$ 51,984$.
C) We are $95 \%$ confident that the SALARY of a top business school graduate will fall between $\$ 37,915$ and $\$ 51,984$.
D) We are $95 \%$ confident that the increase in SALARY for a 600-point increase in GMAT will fall between $\$ 37,915$ and $\$ 51,984$.

Question

A $95 \%$ prediction interval for SALARY when GMAT $= 600$ is $( \$ 37,915 , \$ 51,948 )$. Interpret this interval for the situation above.

A) We are $95 \%$ confident that the mean SALARY of all top business school graduates with GMATs of 600 will fall between $\$ 37,915$ and $\$ 51,984$.
B) We are $95 \%$ confident that the SALARY of a top business school graduate with a GMAT of 600 will fall between $\$ 37,915$ and $\$ 51,984$.
C) We are $95 \%$ confident that the SALARY of a top business school graduate will fall between $\$ 37,915$ and $\$ 51,984$.
D) We are $95 \%$ confident that the increase in SALARY for a 600-point increase in GMAT will fall between $\$ 37,915$ and $\$ 51,984$.

Quizplus · Accepted Answer

A prediction interval provides an estimate of where an individual observation's value (in this case, SALARY) will fall, given a certain level of confidence. Choice B correctly interprets the prediction interval for an individual graduate's salary, not the mean salary (A), not for all graduates regardless of GMAT score (C), and not for the increase in salary due to GMAT score increase (D).

A 95%95 \%95% Prediction Interval for SALARY When GMAT =600= 600=600 Is ($37,915,$51,948)( \$ 37,915 , \$ 51,948 )($37,915,$51,948)

A $95 \%$ Prediction Interval for SALARY When GMAT $= 600$ Is $( \$ 37,915 , \$ 51,948 )$