What problems can occur when the independent variables are correlated with each other?
What will be an ideal response?
Correlations between independent variables can have a major influence on the estimated coefficients. Thus, if one has a choice, highly correlated independent variables should be avoided. But in many cases we do not have that choice. Regression coefficient estimates are always conditional on the other predictor variables in the model. Thus proper model specification—choice of predictor variables—is very important. Model specification requires an understanding of the problem context and appropriate theory implementation.
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Carol works for a tailor and she is being paid a fixed sum for each garment that she alters to customer specifications. Carol is receiving pay that is
a. merit-based. b. skill-based. c. piece-rate. d. gainsharing. e. ESOP.
Which of the following is true about flood insurance?
a. Properties in a flood zone identified by FEMA must carry flood insurance. b. Homeowner's insurance will cover loss from floods. c. Flood insurance can be obtained only if you reside in a flood zone. d. Floods are infrequent enough that flood insurance is optional in all states.