Inspection of the Following Table of Correlation Coefficients for Variables

question 59

Multiple Choice

Inspection of the following table of correlation coefficients for variables in a multiple regression analysis reveals potential multicollinearity with variables ___________. $$\begin{array} { | c | c | c | c | c | c | c | } \hline & y & x _ { 1 } & x _ { 2 } & x _ { 3 } & x _ { 4 } & x _ { 5 } \\\hline y & 1 & & & & & \\\hline x _ { 1 } & 0.854168 & 1 & & & & \\\hline x _ { 2 } & - 0.11828 & - 0.00383 & 1 & & & \\\hline x _ { 3 } & - 0.12003 & - 0.08499 & - 0.14523 & 1 & & \\\hline x _ { 4 } & 0.525901 & 0.118169 & - 0.14876 & 0.050042 & 1 & \\\hline x _ { 5 } & - 0.18105 & - 0.07371 & 0.995886 & - 0.14151 & - 0.16934 & 1 \\\hline\end{array}$$

• A)x₁ and x₂
• B)x₁ and x₅
• C)x₃ and x₄
• D)x₂ and x₅
• E)x₃ and x₅

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Definitions:

Total Variable Cost

The sum of expenses that vary directly with the level of production, such as raw materials and direct labor.

Marginal Cost

The expenditure involved in the production of one extra unit of a product.

Marginal Cost

The sum required to produce an extra unit of a product or service.

Variable Input

An input in the production process that can be adjusted in the short run to change the level of output, such as labor hours or raw materials.