How Many Additional Dummy Variables Are Required If a Categorical

question 54

Multiple Choice

How many additional dummy variables are required if a categorical variable has 4 levels?

• A) 2
• B) 3
• C) 1
• D) 4

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Definitions:

Start-Up Costs

The initial expenses incurred during the process of establishing a business, including research, borrowing costs, licensing, and initial marketing.

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, leading to a decrease in per unit cost with an increase in production.

Least Cost

The process of minimizing expenses involved in producing a good or service while maintaining its quality and efficiency.