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Compensation professionals in the XYZ Company use regression analysis to determine the pay rates of its marketing professionals. There are 4 different marketing job titles in the XYZ Company. Compensation professionals use job evaluation points assigned to each marketing job title and a salary survey data. In other words, they regress job evaluation points on the salary data to indicate the amount of variation in market pay rates that can be explained by a company's job structure. Which of the following best describes this amount of variation when the R2 value turns out to be 0.85?

a. All of the variation in market pay can be explained by the company's job structure.
b. None of the variation in market pay can be explained by the company's job structure.
c. A large amount of the variation in market pay can be explained by company's job structure.
d. A small amount of the variation in market pay can be explained by company's job structure

Sagot :

Anthougoidn

Answer:

XYZ Company

Determining the pay rates of marketing professionals:

The statement that best describes the amount of variation when the R2 value turns out to be 0.85 is:

c. A large amount of the variation in market pay can be explained by company's job structure.

Explanation:

If the R2 were 1, then we can conclude that the whole variation in the market pay rates is explained by XYZ's job structure.  But with R2 less than 1 but greater than 0.5, we can only conclude that a large part of the variation in the market pay rates is explainable by XYZ's job structure.  And if the R2 is less than 0.5, we can confidently conclude that the variation in the market pay rates is not due to XYZ's job structure.

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