In a Regression Setting, Which, If Any, of the Following

question 161

Multiple Choice

In a regression setting, which, if any, of the following is not an assumption about the random error ?

• A) The errors are linearly correlated.
• B) The errors are normally distributed with a mean of 0 and a common variance.
• C) The errors are independent in a probabilistic sense.
• D) All of these are assumptions about the random error.
• E) None of these.

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Definitions:

Demand Curve

A graph showing the relationship between the price of a good and the quantity demanded by consumers at various price levels.

Percentage Change

A mathematical calculation that indicates the degree of change over time, expressed as a proportion of the starting value.

Total Revenue

The complete amount of income generated by the sale of goods or services before any expenses are subtracted.