Residual Analysis Is Conducted to Check Whether Regression Assumptions Are

question 73

Multiple Choice

Residual analysis is conducted to check whether regression assumptions are met. Which of the following is not an assumption made in simple linear regression?

• A) Errors are independent of each other.
• B) Errors are normally distributed.
• C) Errors are linearly related to x.
• D) Errors have constant variance.

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Definitions:

Resource Prices

The cost associated with acquiring the natural resources needed for production, such as minerals, timber, water, and land.

Output Increased

A situation where the production of goods or services in an economy rises.

Purely Competitive Market

A market structure characterized by a large number of small firms, a homogeneous product, free entry and exit, and perfect information, leading to firms being price takers.

Short Run

A time period in which at least one factor of production is fixed, limiting the ability of a firm to adjust its output.