As a Project for His Business Statistics Class,a Student Examined

Multiple Choice

As a project for his business statistics class,a student examined the factors that determined parking metre rates throughout the campus area.Data were collected for the price per hour of parking,blocks to the quadrangle,and one of the three jurisdictions: on campus,in downtown and off campus,or outside of downtown and off campus.The population regression model hypothesised is Y_i = α + β₁x_1i + β₂x_2i + β₃x_3i + ε_i
Where
Y is the metre price
X₁ is the number of blocks to the quad
X₂ is a dummy variable that takes the value 1 if the metre is located in downtown
And off campus and the value 0 otherwise
X₃ is a dummy variable that takes the value 1 if the metre is located outside of
Downtown and off campus,and the value 0 otherwise
Suppose that whether the metre is located on campus is an important explanatory factor.Why should the variable that depicts this attribute not be included in the model?

A) Its inclusion will introduce autocorrelation.
B) Its inclusion will inflate the standard errors of the estimated coefficients.
C) Its inclusion will introduce collinearity.
D) Both B and C.