A healthcare executive is using regression to predict total revenues.She has decided to include both patient length of stay and insurance type in her model.Insurance type can be grouped into the following categories: Medicare, Medicaid, Managed Care, Self-Pay, and Charity.Which of the following is true?
A)Insurance type will be represented in the regression model by five binary variables.
B)Insurance type will be represented in the regression model by six dummy variables.
C)Insurance type will be represented in the regression model by five dummy variables.
D)Insurance type will be represented in the regression model by four binary variables.

Question

Quizplus · Accepted Answer

Insurance type, a categorical variable with five categories, will be represented by one less than the number of categories in dummy coding to avoid the dummy variable trap. Thus, four binary variables (dummy variables) are needed to represent the five categories.

A Healthcare Executive Is Using Regression to Predict Total Revenues