Heteroskedasticity occurs when
A)the error variance is constant.
B)the error variance is non-constant.
C)the dependent variable variance is constant.
D)the dependent variable variance is non-constant.

Question

Quizplus · Accepted Answer

Heteroskedasticity occurs when the error variance is non-constant. In other words, the variance of the errors is different for different levels of the independent variables. The term "heteroskedasticity" comes from the Greek word "hetero," which means "different," and "skedasis," which means "dispersion." Heteroskedasticity violates the assumption of homoscedasticity and can lead to biased and inefficient estimates of the regression coefficients.

Heteroskedasticity Occurs When