If R² Is Less Than 1

question 10

Multiple Choice

If R² is less than 1,

• A)the regression analysis is incorrect.
• B)the observation data is suspect.
• C)some observations do not lie on the regression line.
• D)the probability of having the correct fit is very low.

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Definitions:

Gas Tax

A government-imposed tax on the sale of gasoline, primarily used to fund transportation infrastructure projects.

Optimal Level

The most efficient, effective, or desirable point or degree for a specific purpose or condition.

Corrective Taxes

Taxes designed to encourage or discourage certain behaviors among consumers or producers, often used to correct the effects of a negative externality.

Coase Theorem

The proposition that if private parties can bargain without cost over the allocation of resources, they can solve the problem of externalities on their own