If a categorical variable has k levels, the number of dummy variables required is
A) k - 1.
B) k.
C) k + 1.
D) 2k.

Name: If a categorical variable has k levels, the number of dummy variables required is A) k - 1. B) k. C) k + 1. D) 2k.
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Question

If a categorical variable has k levels, the number of dummy variables required is​
A) ​k - 1.
B) ​k.
C) ​k + 1.
D) ​2k.

Quizplus · Accepted Answer

When using dummy variables to encode a categorical variable with k levels in a regression model, k - 1 dummy variables are required. This is because one level can be inferred from the others (it is the baseline category), preventing multicollinearity.

If a Categorical Variable Has K Levels, the Number of Dummy