Three Predictor Variables Are Being Considered for Use in a Linear

question 69

Essay

Three predictor variables are being considered for use in a linear regression model.Given the correlation matrix below,does it appear that multicollinearity could be a problem?

---

Definitions:

Inferior Good

A type of good for which demand decreases as the income of the consumer increases, opposite to normal goods.

Quantity Demanded

The total amount of a good or service consumers are willing and able to purchase at a given price level.

Increase in Price

A situation where the cost of goods or services rises, potentially due to factors like higher demand, production costs, or inflation.

Supply and Demand

Supply and demand is an economic model that explains the interaction between the availability of a resource and the desire for that resource, affecting its price.