Question: Consider the following regression equation: EARN INGS = 1,000 + 1,600 * AGE 20 * SQAGE where SQAGE is the square of AGE, AGE

Consider the following regression equation:

EARNˆ INGS = 1,000 + 1,600 * AGE − 20 * SQAGE where SQAGE is the square of AGE, AGE is measured in years, and EARNINGS is annual earnings.

(a) If you plotted predicted values from this prediction equation, would you expect to see a U- or inverted U-shape? Why?

(b) At what value of AGE does the slope switch directions?

(c) What are predicted earnings when AGE is 20, 40, and 60?

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