83 Check Assumptions and Conditions for the Multiple Regression Model

question 12

Multiple Choice

8.3. Check assumptions and conditions for the multiple regression model.
-What affects flat panel LCD TV sales? Flat panel LCD TV's are sold through a
Variety of outlets. Sales figures (number of units) for the popular Sony Bravia were
Obtained for last quarter from a sample of 30 different stores. Also collected were data
On the selling price and amount spent on advertising the Sony Bravia (as a percentage of
Total advertising expenditure in the previous quarter) at each store. A multiple regression
Model was fit to the data and the plot of residuals versus predicted values is shown
Below. What does the residual plot suggest?

• A) The Linearity condition is not satisfied.
• B) There is an extreme departure from normality.
• C) The variance is not constant.
• D) The presence of a couple of outliers.
• E) The plot thickens from left to right.

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Definitions:

Unit of Labor

A measure of labor input, often referred to as one hour of work by an employee or worker.

Marginal Product

The additional output resulting from the use of one more unit of a production input.

Total Product

The total output of goods or services produced by a firm over a given period of time.

Marginal Product

Marginal product is the additional output gained from increasing one unit of a variable input, holding all other inputs constant, in the production process.