It Is Desired to Build a Regression Model to Predict $y =$

question 12

Multiple Choice

It is desired to build a regression model to predict $y =$ the sales price of a single family home, based on the $x _ { 1 } =$ size of the house and $x _ { 2 } =$ the neighborhood the home is located in. The goal is to compare the prices of homes that are located in two different neighborhoods. The following model is proposed:
$$\mathrm { E } ( \mathrm { y } ) = \beta _ { 0 } + \beta _ { 1 } \mathrm { x } _ { 1 } + \beta _ { 2 } \mathrm { x } _ { 2 }$$
A regression model was fit and the following residual plot was observed.
Residual



Which of the following assumptions appears violated based on this plot?

• A) The variance of the errors is constant
• B) The errors are independent
• C) The mean of the errors is zero
• D) The errors are normally distributed