Multicollinearity exists when which of the following conditions is present?
A) At least two variables change due to changes in the cost driver.
B) There are at least two cost pools (usually separated for fixed and variable costs).
C) The underlying value of the coefficient can only be explained in relation to dependent variables.
D) There are two or more statistically significant observations of at least two independent variables.
E) Two or more independent variables are highly correlated with each other.

Question

Quizplus · Accepted Answer

Multicollinearity occurs when two or more independent variables in a regression model are highly correlated with each other, which can make it difficult to determine the individual effect of each variable on the dependent variable.

Multicollinearity Exists When Which of the Following Conditions Is Present