Determine When a Linear Model Is Appropriate for Data

question 6

Multiple Choice

Determine when a linear model is appropriate for data.
-Based on the following plot of residuals, which assumption and / or condition is not
Satisfied for using a linear regression model?

• A) Nearly normal condition.
• B) Equal spread condition.
• C) Linearity condition.
• D) Quantitative variables condition.
• E) Randomization condition.

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Definitions:

Supply Function

A mathematical relationship that describes the quantity of a good or service that producers are willing to sell at various prices.

Demand Function

A mathematical equation representing the relationship between the quantity demanded of a good and factors affecting its demand, such as price.

Inverse Demand

A representation of demand that expresses price as a function of quantity demanded, contrary to the typical demand function.

Inverse Supply

A concept in economics that describes a situation in which the supply of a good decreases as its price decreases, opposite to the normal supply behavior.