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:

Excess Capacity

The situation where a firm is producing at a lower scale of output than it has been designed to handle, resulting in unused productive capacity.

Source Of Inefficiency

Factors or situations that prevent an economy or system from achieving optimal allocation and utilization of resources, leading to wasted potential.

Product Diversity

The variety of different items that a company produces or that is available in a market.

Long-run Equilibrium

A state in which all factors of production and costs are variable, and all economic actors have fully adjusted to any economic changes, leading to a no-profit, no-loss scenario.