Consider the following to answer the question(s) below:
An alternative multiple regression model is fit to the data on the sample of firms selected from the high tech industry (Industry = 1) and the financial services sector (Industry = 0). The results are shown below.
-What does the scatterplot of these data (shown below) suggest?
A) Using Job Growth as an indicator variable in this model is appropriate.
B) Using the interaction term Job Growth×Industry in the model is appropriate.
C) Using Industry as an indicator variable in this model is appropriate.
D) Job Growth should not be included in the model as a variable.
E) Using Industry as an indicator variable in this model is definitely not appropriate.

Question

Consider the following to answer the question(s) below:
An alternative multiple regression model is fit to the data on the sample of firms selected from the high tech industry (Industry = 1) and the financial services sector (Industry = 0). The results are shown below. 
-What does the scatterplot of these data (shown below) suggest? 
A) Using Job Growth as an indicator variable in this model is appropriate. 
B) Using the interaction term Job Growth×Industry in the model is appropriate. 
C) Using Industry as an indicator variable in this model is appropriate. 
D) Job Growth should not be included in the model as a variable. 
E) Using Industry as an indicator variable in this model is definitely not appropriate.

Quizplus · Accepted Answer

The scatterplot suggests that there is a difference in the relationship between Employees and Revenue for the high tech and financial services sectors. Therefore, using Industry as an indicator variable in this model is appropriate. However, it is not clear from the scatterplot whether including Job Growth or the interaction term Job Growth×Industry is appropriate.

Consider the Following to Answer the Question(s) Below