If a Qualitative Variable Has Three Categories, How Many Dummy

question 51

Multiple Choice

If a qualitative variable has three categories, how many dummy variables are needed?

• A)0
• B)1
• C)2
• D)3
• E)4

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Definitions:

Commodity

A basic good used in commerce that is interchangeable with other goods of the same type; commodities are often used as inputs in the production of other goods or services.

Comparative Advantage

The competency of a country, individual, corporation, or region to manufacture a good or provide a service at a reduced opportunity cost than that of its competition.

Relative Efficiency

A measure of how effectively an entity (such as a firm or economy) utilizes its resources compared to another, often used to identify opportunities for improvement.

Absolute Efficiency

A state where resources are allocated in the most effective way possible, achieving maximum output with given inputs.