Which of the Following Is Not a Possible Indicator of Multicollinearity

question 57

Multiple Choice

Which of the following is not a possible indicator of multicollinearity?

• A) non-random patterns in the plot of the residuals versus the fitted values
• B) significant correlations between pairs of independent variables
• C) non-significant t-tests for individual β parameters when the F-test for overall model adequacy is significant
• D) signs opposite from what is expected in the estimated β parameters

---

Definitions:

Socially Optimal

A situation in which resources are allocated in the most efficient way from the society's point of view, maximizing total welfare.

Pollution

The contamination of the natural environment by harmful substances or energies, which can affect air, water, and land negatively and pose risks to human health and ecosystems.

Marginal Benefit

The boost in utility or enjoyment derived from the additional consumption of a unit of a good or service.

Government Intervention

Actions taken by a government to affect the economy in various ways, such as through regulations, taxes, subsidies, or direct provision of goods and services.