When Working with Categorical Variables It Is Fine to Collapse

question 10

Multiple Choice

When working with categorical variables it is fine to collapse categories together if:

• A)The resulting category is theoretically meaningful
• B)You have only a few people in some categories
• C)You have violated the assumptions of the χ² test if you do not
• D)Categories may never be collapsed

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Definitions:

Distribution of Sales

The analysis or allocation of sales among different categories, regions, or periods to understand the pattern or strategy of sales.

Contribution Margin

The amount by which a product's sales price exceeds its variable costs, indicating how much it contributes towards covering fixed costs and generating profit.

Sales Revenues

The income received by a company from its sales of goods or the provision of services, before any expenses are deducted.

Variable Costs

Variable expenses directly linked to the operational scale of a business.