Quarterly sales figures for e-commerce retail sales were obtained from the first quarter of 2003 through the fourth quarter of 2009. A regression model was estimated to describe the trend in e-commerce retail sales over time.
a. Based on the plot of residuals versus predicted values, is the linear model appropriate? Explain. b. The Durbin-Watson statistic for this regression was found to be 1.727. What can you conclude from this statistic at the 0.01 level of significance?

Question

Quarterly sales figures for e-commerce retail sales were obtained from the first quarter of 2003 through the fourth quarter of 2009. A regression model was estimated to describe the trend in e-commerce retail sales over time.
a. Based on the plot of residuals versus predicted values, is the linear model appropriate? Explain.  b. The Durbin-Watson statistic for this regression was found to be 1.727. What can you conclude from this statistic at the 0.01 level of significance?

Quizplus · Accepted Answer

The Answer is a. The residual plot shows a curvature. In addition, the plot seems to thicken. The spread of residuals increases as the value of the fitted value increases (over time).
b. There is no evidence of positive or negative autocorrelation.

Quarterly Sales Figures for E-Commerce Retail Sales Were Obtained from the First