Data on labor productivity and unit labor costs were obtained for the retail industry
from 1987 through 2006 (Bureau of Labor Statistics). A regression was estimated to
describe the linear relationship between the two variables.
a. Based on the plot of residuals versus predicted values, is the linear model
appropriate? Explain.
b. Would a re-expression of the data help? If so, what would you recommend?

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The Answer of Data on labor productivity and unit labor costs were obtained for the retail industry
from 1987 through 2006 (Bureau of Labor Statistics). A regression was estimated to
describe the linear relationship between the two variables.
a. Based on the plot of residuals versus predicted values, is the linear model
appropriate? Explain.
b. Would a re-expression of the data help? If so, what would you recommend?

Data on Labor Productivity and Unit Labor Costs Were Obtained