What Is a Clear Indicator of Non-Constant Variance in a Plot

question 1

Multiple Choice

What is a clear indicator of non-constant variance in a plot of regression model residuals?

• A) A non-linear trend in the residual plot.
• B) An intercept standard error larger that the estimated intercept coefficient.
• C) A funnel shaped trend in the residual plot.
• D) The standard errors from each independent variable differ.

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Definitions:

Quantity Supplied

The total amount of a particular good or service that producers are willing and able to sell at a given price over a specific time period.

Perfectly Inelastic

A situation in demand where the quantity demanded does not change in response to a change in price; represented graphically as a completely vertical demand curve.

Demand Curve

A graphical representation showing the relationship between the price of a good or service and the quantity demanded by consumers at various prices.

Supply Curve

A graphical representation of the relationship between the price of a good and the quantity of the good that suppliers are willing to sell.