In a multiple regression model, the variance of the error term ε is assumed to be
A) the same for all values of the dependent variable.
B) zero.
C) the same for all values of the independent variable.
D) one.

Question

Quizplus · Accepted Answer

In a multiple regression model, the assumption of homoscedasticity implies that the variance of the error term (ε) is constant across all levels of the independent variables. This means that the spread of the residuals (errors) should be roughly the same across all values of the independent variables, ensuring that the model's predictions are equally reliable across the range of the independent variables.

In a Multiple Regression Model, the Variance of the Error