If a Qualitative Variable Has "C" Categories, How Many Dummy

question 50

Multiple Choice

If a qualitative variable has "c" categories, how many dummy variables must be created and used in the regression analysis?

• A)c - 1
• B)c
• C)c + 1
• D)c - 2
• E)4 + c

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Definitions:

Fixed Costs

Costs that remain constant regardless of the amount of products or services a company generates, including expenses like lease payments, wages, and premiums.

Break-even Point

The volume of production or sales at which total revenues equal total costs, resulting in neither profit nor loss.

Variable Cost

Expenses that vary directly with the level of production or sales volume, such as raw materials and direct labor.

Margin of Safety

The difference between actual or projected sales and the break-even point, indicating the amount by which sales can drop before reaching a loss.