This problem does not require that you know anything about baseball.
Suppose that after collecting data on team payroll (in millions of dollars) and season win total for 2015, we estimate the following regression equation:
Wins = 71.87 + 0.101Payroll - 0.060League
where League is a dummy variable that equals 1 if the team plays in the National League or 0 if the team plays in the American League.
a. If Teams A and B both play in the same league, and Team A’s payroll is $1 million higher than Team B’s, would we expect Team A to win, on average, more games or fewer games than Team B?
How many more or how many less would we expect them to win?
b. If Teams A and B have the same payroll, but Team A plays in the National League while Team B plays in the American League, would we expect Team A to win, on average, more games or fewer games than Team B? How many more or how many less would we expect them to win?
c. Suppose we plotted the data and drew the regression lines for National League and American League teams. What would be the slope of the line for American League teams? What would be the slope of the line for National League teams? What would be the intercept of the line for National League teams?
d. Calculate the predicted number of wins for a National League team with a payroll of $98 million
