In a Simple Regression Y = B₀ + B₁X Where

question 13

Multiple Choice

In a simple regression Y = b₀ + b₁X where Y = number of robberies in a city (thousands of robberies) , X = size of the police force in a city (thousands of police) , and n = 45 randomly chosen large U.S. cities in 2008, we would be least likely to see which problem?

• A)Autocorrelated residuals (because this is time-series data)
• B)Heteroscedastic residuals (because we are using totals uncorrected for city size)
• C)Nonnormal residuals (because a few larger cities may skew the residuals)
• D)High leverage for some observations (because some cities may be huge)

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Definitions:

Central Planning

An economic system where the government or a central authority makes all decisions regarding the production and distribution of goods and services.

Capitalism

An economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market.

Limited

In a business context, referring to a company where the liability of its members is restricted to what they have invested or guaranteed to the company.

Communist Society

A theoretical economic system characterized by the collective ownership of property and by the organization of labor for the common advantage of all members.