Suppose That the Following Model Was Fit to a Set $$E ( y ) = \beta _ { 0 } + \beta _ { 1 } x _ { 1 } + \beta _ { 2 } x _ { 2 }$$

Multiple Choice

Suppose that the following model was fit to a set of data. $$E ( y ) = \beta _ { 0 } + \beta _ { 1 } x _ { 1 } + \beta _ { 2 } x _ { 2 }$$
The corresponding plot if residuals against predicted values $\hat { y }$ is shown. Interpret the plot.

A) It appears that the variance of $\varepsilon$ is not constant.
B) It appears that the data contain an outlier.
C) The residuals appear to be randomly scattered so that no model modifications are necessary.
D) It appears that a quadratic model would be a better fit.