Dropping an Independent Variable from a Multiple Linear Regression Model

question 109

Multiple Choice

Dropping an independent variable from a multiple linear regression model will always result in:

• A)An increase in the MSE value
• B)An increase in the R²value
• C)A decrease in the R²value
• D)A decrease in the MSE value
• E)A decrease in the value of the F test statistic

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Definitions:

Contribution Format

A method of income statement presentation where all variable costs are subtracted from sales to find the contribution margin, followed by the deduction of fixed costs to determine net operating income.

Traceable Fixed Expenses

Fixed costs directly associated with a specific department or product, which would disappear if the department or product were eliminated.

Break-even

The point at which total revenues equal total costs, resulting in no net loss or gain.

Sales Dollars

The total monetary value of sales transactions made within a specific period, reflecting the revenue generated from selling goods or services.