QUESTION 3: (15 POINTS) It is well known that ranking of law schools in the US influences starting salary of students. Suppose you want to estimate the effect of ranking on median starting salary. The below output reports the results of a simple OLS regression analysis. In this model, the variable school rank has been divided into four dummy variables (with a fifth variable held out of the model as a reference category): (1) top10: i.e., whether he school is ranked in the top 10 (1=yes, 0=no), (2) r11-25: i.e., ranked in the top 11-25 (1=yes, 0=no), (3)r26-40: i.e., ranked in the top 26- 40 (1=yes, 0=no) and 4) r41-60: i.e., ranked in the top 41-60 (1=yes, 0=no). The base/reference category in the regression model is >60 for schools above the 60th rank (1=yes, 0=no). Also, given that median salary is almost always positively skewed (right skewed), the dependent variable above is measured as the natural log of starting median salary (Isalace) a. What percent of the total variation in starting median salary can be attributed to the model in Exhibit 5 (not adjusting for additional variables)? (2 pts) b. What percent of the total variation in starting median salary can be attributed to the model in Exhibit 5 (adjusting for additional variables)? (2 pts) C. How would you interpret the F-stat in this model? (2pts) Interpret the coefficient for "r1 1_25" in your model. Remember to interpret the dependent variable as a log dependent variable. (3 pts) e. Interpret the coefficient for "top ten" in your model. Remember to interpret the dependent variable as a log dependent variable. (3 pts) Based on your interpretation, does the coefficient for "top ten" seem practically significant? (3 pts.) Exhibit 5 . reg lsalary top10 rl1 25 r26 40 r41 60 Source SS di MS Number of obs = 148 F ( 4, 143) = 222. 10 Model . 69572381 4 2. 42393095 Prob > F 0 . 0000 Residual 1. 56068434 143 . 010913876 R-squared = 0 . 8614 Adj R-squared = 0. 8575 Total 11 . 2564081 147 . 076574205 Root MSE = . 10447 lsalary Coef. Std. E P> It [95% Conf. Interval] top10 7567631 034767 21 . 77 0. 000 6880395 8254867 rl1 25 . 603897 0282749 1 . 36 0. 000 5480062 6597878 r26 40 3659125 . 0320444 11 . 42 0. 000 3025706 . 4292544 r41 60 . 2447043 . 0275562 8 . 88 0 . 000 1902341 . 2991745 cons 10 . 35458 . 010833 955 . 84 0. 000 10.33317 10 .37599