A simple linear regression, ,is estimated using cross-sectional data from 10 firms.The resulting residuals e,along with the values of the explanatory variable Advertising (x,in $100s),are shown in the accompanying table. a.Graph the residuals e against Advertising (x)and look for any discernible pattern.
b.Which assumption is being violated? Discuss its consequences and suggest a possible remedy.

Question

A simple linear regression, ,is estimated using cross-sectional data from 10 firms.The resulting residuals e,along with the values of the explanatory variable Advertising (x,in $100s),are shown in the accompanying table.  a.Graph the residuals e against Advertising (x)and look for any discernible pattern.
b.Which assumption is being violated? Discuss its consequences and suggest a possible remedy.

Quizplus · Accepted Answer

The Answer of A simple linear regression, ,is estimated using cross-sectional data from 10 firms.The resulting residuals e,along with the values of the explanatory variable Advertising (x,in $100s),are shown in the accompanying table.  a.Graph the residuals e against Advertising (x)and look for any discernible pattern.
b.Which assumption is being violated? Discuss its consequences and suggest a possible remedy.

A Simple Linear Regression, ,Is Estimated Using Cross-Sectional Data from 10