Adjust for Different Slopes Using Interaction Terms in Multiple Regression

question 9

Multiple Choice

Adjust for different slopes using interaction terms in multiple regression.
-A sample of 30 companies was randomly selected for a study investigating what
Factors affect the size of company bonuses. Data were collected on the number of
Employees at the company and whether or not the employees were unionized (1 = yes,
0 = no) . What does the scatterplot of these data (shown below) suggest?

• A) Using Union as an indicator variable in this model is appropriate.
• B) Using the interaction term Employees*Union in the model is appropriate.
• C) Union should not be included in the model as a variable.
• D) Employees should not be included in the model as a variable.
• E) None of the above.

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