In the scenario described in Question 9, if the residual (e_i) is -3.5 for a particular house, it means that A) the regression function overestimates the selling price by $3,500. B) the regression function underestimates the selling price by $3,500. C) the selling price is estimated to be 3.5 standard deviations below the average price. D) the regression function is not valid because the prediction is erroneous.

Question

Quizplus · Accepted Answer

A negative residual (e_i = -3.5) indicates that the actual selling price of the house is $3,500 less than the predicted selling price by the regression function, meaning the function overestimates the selling price.

In the Scenario Described in Question 9, If the Residual