Under What Circumstances Does the Variance Inflation Factor Signal That

question 25

Multiple Choice

Under what circumstances does the variance inflation factor signal that multicollinearity may be a problem?

• A) When the value of VIF exceeds the size of the sample from which the regression model was developed
• B) When the VIF value is approximately 1.0
• C) When the VIF is greater than or equal to 5
• D) When the VIF is a negative value

---

Definitions:

Price

The amount of money required to purchase a good, service, or asset.

AVC

Average Variable Cost represents the variable costs (like materials and labor) associated with producing each unit of output.

ATC

Average Total Cost, the total cost of production divided by the quantity of output produced, encompassing both fixed and variable costs.

MC

Short for Marginal Cost, it refers to the change in total cost that arises when the quantity produced is incremented by one unit.