Hope Hernandez is the new regional Vice President for a large gasoline station chain.She wants a regression model to predict sales in the convenience stores.Her data set includes two qualitative variables: the gasoline station location (inner city, freeway, and suburbs), and curb appeal of the convenience store (low, medium, and high).The number of dummy variables needed for Hope's regression model is ______.
A)2
B)4
C)6
D)8
E)9

Question

Quizplus · Accepted Answer

For regression models, each qualitative variable requires a number of dummy variables equal to the number of categories minus one. For the gasoline station location (3 categories), we need 2 dummy variables. For curb appeal (3 categories), we also need 2 dummy variables. Therefore, the total number of dummy variables needed is 2 + 2 = 4.

Hope Hernandez Is the New Regional Vice President for a Large