We modeled the price of a diamond based on it\'s carat weight. Initially,a simpl

Question

We modeled the price of a diamond based on it's carat weight. Initially,a simple linear regression model was proposed and the following residual plot was created. Which conclusion should you reach when analyzing this plot? Scatter Plot of residual vs CARAT 01 es CARAT No problems are detected by this plot The plot shows a curvillinear pattern and indicates that a quadratic term for the carat variable should be entered into the model. The plot shows a curvillinear pattern and indicates that a quadratic term for the price variable should be used as the dependent variable The plot shows a curvillinear pattern indicating that the model is specified correctly Question 2 2 pts

Explanation / Answer

Ans B . This plot shows a curvilinear pattern and indicates a quadratic term for the carat variable should be entered in to the model.

This is because the points of the point do not show a linear pattern and hence curvature can be detected. This curvature can be included in the model by adding a quadratic term for the carat variable ( i.e independent variable )

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