The error term in the regression model represents
A)a constant.
B)the standard error of the model.
C)all factors that determine the criterion variable that are not part of the model.
D)the coefficient of correlation.
E)nonsampling error.

Question

Quizplus · Accepted Answer

The error term represents all factors that determine the criterion variable that are not part of the model. These factors can include measurement error, omitted variables, and other sources of variation that are not accounted for in the model. The error term is also sometimes called the residual, and it is the difference between the observed values of the criterion variable and the predicted values based on the model. Therefore, Choice C is the most appropriate answer. The other choices are incorrect because the error term is not a constant (Choice A), the standard error of the model (Choice B), the coefficient of correlation (Choice D), or nonsampling error (Choice E) although the error term can be related to them.

The Error Term in the Regression Model Represents