The table above shows the yearly salary, in dollars, of an employee at a company. Which of the following best describes the type of model that fits the data in the table?
A) Linear, increasing by approximately $1,140 per year
B) Linear, increasing by approximately $1,245 per year
C) Exponential, increasing by approximately 3% each year
D) Exponential, increasing by approximately 9% each year
First, calculate the yearly increase in salary.
If the increase is constant through out each year, a linear model can be applied.
From Year 0 to Year 1, the salary increases by:
39,140 - 38,000 = $1,140
From Year 1 to Year 2, the salary increases by:
40,314 - 39,140 = $1,174
From Year 2 to Year 3, the salary increases by:
41,524 - 40,314 = $1,210
From Year 3 to Year 4, the salary increases by:
42,769 - 41,524 = $1,245
Since the rate of increase is not constant, a linear model cannot be applied, thus, an exponential model is used instead.
Next, calculate the increase ratio using any year range.
Using year 0 to year 1,
Increase ratio = 39,140/38,000
= 1.03 OR 3%
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