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:

House of Commons

The lower house of the Parliament of the United Kingdom, consisting of Members of Parliament elected to represent constituencies.

Seven Years' War

A global conflict fought between 1756 and 1763, involving most of the great powers of the time and affecting Europe, North America, Central America, the West African coast, India, and the Philippines.

Declaration of Independence

A historic document adopted on July 4, 1776, by the Second Continental Congress, announcing the thirteen American colonies' separation from Great Britain.

Stamp Act Congress

A meeting held in 1765 in New York City by representatives from the American colonies to protest against the British Stamp Act, an early form of organized resistance against British policy.