An Interaction Term in a Multiple Regression Model May Be

question 50

Multiple Choice

An interaction term in a multiple regression model may be used when

• A)the coefficient of determination is small.
• B)there is a curvilinear relationship between the dependent and independent variables.
• C)neither one of 2 independent variables contribute significantly to the regression model.
• D)the relationship between X₁ and Y changes for differing values of X₂.

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Definitions:

Overhead

Refers to ongoing business expenses not directly tied to creating a product or service.

Variable Costs

Expenses that vary directly with the level of production or sales volume, such as raw materials and direct labor.

Book Value

The value of an asset according to its balance sheet account balance, calculated by subtracting the accumulated depreciation from the asset's original purchase cost.

Trading In

The act of giving a used item as part of the payment for a new item, often used in car sales.