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A Simple Linear Regression, Sales = β0 + β1 Advertising

Question 96

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A simple linear regression, Sales = β0 + β1 Advertising + ε, 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 simple linear regression, Sales = β<sub>0</sub> + β<sub>1</sub> Advertising + ε, 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. 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.

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a. blured image b. Heteroscedasticity is likely a pr...

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