Consider the following to answer the question(s) below:
Suppose that data on labour productivity and unit labour costs were obtained for the retail industry from 1990 through 2009. A regression was estimated to describe the linear relationship between the two variables.
-What does the plot of residuals suggest?
A) The linearity condition is not satisfied, and the equal spread condition is not satisfied.
B) The data are not normal.
C) The equal variance condition is not met.
D) The linearity condition is not met.
E) The linearity condition is not met and the data is not normal.

Question

Consider the following to answer the question(s) below:
Suppose that data on labour productivity and unit labour costs were obtained for the retail industry from 1990 through 2009. A regression was estimated to describe the linear relationship between the two variables. 
-What does the plot of residuals suggest?
A) The linearity condition is not satisfied, and the equal spread condition is not satisfied. 
B) The data are not normal. 
C) The equal variance condition is not met. 
D) The linearity condition is not met. 
E) The linearity condition is not met and the data is not normal.

Quizplus · Accepted Answer

The plot of residuals shows that the linearity condition is not satisfied because the residuals are not randomly scattered around the horizontal line. The equal spread condition is also not satisfied because the residuals are not evenly spread out around the horizontal line.

Consider the Following to Answer the Question(s) Below