A decision maker is considering constructing a multiple regression model with two independent variables. The correlation between x1 and y is 0.70, and the correlation between variable x2 and y is 0.50. Based on this, the regression model containing both independent variables will explain 74 percent of the variation in the dependent variable.

Question

Quizplus · Accepted Answer

The explanation of variation in the dependent variable by a multiple regression model cannot be directly inferred from the individual correlation coefficients of the independent variables with the dependent variable. The overall explanatory power of the model (R^2) depends on the correlations among all variables involved, including the correlation between the independent variables themselves.

A Decision Maker Is Considering Constructing a Multiple Regression Model