SCENARIO 14-10
You worked as an intern at We Always Win Car Insurance Company last summer. You notice that individual car insurance premiums depend very much on the age of the individual and the number of traffic tickets received by the individual. You performed a regression analysis in EXCEL and obtained the following partial information:

-Referring to Scenario 14-9,if the variable that measures the number of firms that manufacture automobile parts in and around the city is removed from the multiple regression model,which of the following would be true?

Question

SCENARIO 14-10
You worked as an intern at We Always Win Car Insurance Company last summer. You notice that individual car insurance premiums depend very much on the age of the individual and the number of traffic tickets received by the individual. You performed a regression analysis in EXCEL and obtained the following partial information:

-Referring to Scenario 14-9,if the variable that measures the number of firms that manufacture automobile parts in and around the city is removed from the multiple regression model,which of the following would be true?

Quizplus · Accepted Answer

Removing a variable from a multiple regression model will always decrease the coefficient of multiple determination (R-squared), as it implies that some of the variation in the dependent variable is no longer being explained by the model. Therefore, choices A and D can be eliminated. Choice B is incorrect because the adjusted R-squared can still increase or decrease depending on the remaining variables in the model. Therefore, the correct answer is C.

SCENARIO 14-10 You Worked as an Intern at We Always Win Car