The Head of Special Projects and Planning of a Network

question 14

Multiple Choice

The Head of Special Projects and Planning of a network of shops develops a plan for opening new stores. He suggests that the annual revenue of a supermarket depends mainly on the size of the sales area. A scatterplot of the data, a residual plot, and a histogram of the residuals are shown below. What do the graphs suggest about the adequacy of the simple linear regression model? ​ ​

• A) The model is not appropriate, because the histogram shows that the residuals are not normally distributed.
• B) The model is not appropriate, because the residual plot shows a curved pattern.
• C) The model is not appropriate, because the residual plot shows a potentially influential observation.
• D) The model is not appropriate, because the residual plot indicates an outlier.
• E) The model is appropriate, all the conditions for a linear regression are met.

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Definitions:

Strong

Having the power to withstand or exert great force, durability, or influence, often used in various contexts such as physical strength, strong arguments, or strong economies.

Business Climate

The economic and regulatory environment that affects the operation, growth, and profitability of businesses.

Industrialized Countries

are nations that have highly developed industries and infrastructure, often characterized by high levels of income and technology.

U.S. Labor Law

The collection of federal and state laws governing employment relationships, workplace rights, and labor organization in the United States.