Consider the following regression result paraphrased from a study conducted by the admissions office at the Stanford Business School (standard errors in parentheses):

Where:

G_i = the Stanford Business School GPA of the ith student (4 = high)

M_i = the score on the graduate management admission test of the ith student (800 = high)

B_i = the number of years of business experience of the ith student

A_i = the age of the ith student

S_i = dummy equal to 1 if the ith student was an economics major, 0 otherwise

a. Theorize the expected signs of all the coefficients (try not to look at the results) and test these expectations with appropriate hypotheses (including choosing a significance level).

b. Do any problems appear to exist in this equation? Explain your answer.

c. How would you react if someone suggested a polynomial functional form for A? Why?

d. What suggestions (if any) would you have for another run of this equation?