Consider the Following Plot of Residuals from a Regression

question 165

Multiple Choice

Consider the following plot of residuals from a regression.This pattern suggests which of the following problems?

• A)autocorrelation
• B)specification bias
• C)multicollinearity
• D)heteroscedasticity

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Definitions:

Comparative Advantage

The ability of a country, individual, company, or region to produce a good or service at a lower opportunity cost than competitors.

Petroleum

A naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons and other organic compounds, used primarily as fuel and in the production of various chemicals.

Crude Oil

A naturally occurring, unrefined petroleum product composed of hydrocarbon deposits and other organic materials, used as a fuel and raw material in chemical industries.

Opportunity Cost

Surrendering the chance for gains from other choices by opting for one path.