Your textbook states that correlation of the error term across observations "will not
happen if the data are obtained by sampling at random from the population." However, in
one famous study of the electric utility industry, the observations were listed by the size
of the output level, from smallest to largest.The pattern of the residuals was as shown in
the figure.
What does this pattern suggest to you?

Question

Quizplus · Accepted Answer

The Answer of Your textbook states that correlation of the error term across observations "will not
happen if the data are obtained by sampling at random from the population." However, in
one famous study of the electric utility industry, the observations were listed by the size
of the output level, from smallest to largest.The pattern of the residuals was as shown in
the figure.
What does this pattern suggest to you?

Your Textbook States That Correlation of the Error Term Across