Why Is the Number of Dummy Variables to Be Entered

question 3

Multiple Choice

Why is the number of dummy variables to be entered into the regression model always equal to the number of groups (g) minus 1 (g−1) ?

• A) To avoid model misspecification
• B) To increase the R-squared value
• C) To avoid the situation of perfect multicollinearity
• D) To control other variables in the model

Examine the origins and impact of the Bill of Rights on American society.

Explore the challenges of forming a national identity in a diverse new nation.

Assess the strategies and policies towards Indians during early American government formation.

Understand the evolution of voting rights and requirements in the United States post-American Revolution.

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Definitions:

Profit-Maximizing

A strategy focused on increasing a firm's earnings to its highest possible level.

Unregulated

Describes activities or sectors not controlled or governed by rules set by authorities or regulatory bodies.

Profit-Maximizing

A strategy in business where a firm seeks to achieve the highest possible profit.

Monopolist

An individual or company that is the sole provider of a particular product or service in the market, giving them significant control over prices and market conditions.