If dummy variables are used to represent distinct subsets or regions,then a linear relationship between predictor variables will result,and estimation of coefficients will be impossible.

Question

Quizplus · Accepted Answer

If dummy variables are used to represent distinct subsets or regions, they will create a categorical variable that cannot have a linear relationship with other predictor variables. This is known as the dummy variable trap, and it makes it impossible to estimate the coefficients of the model because the variables are not independent. In order to avoid this issue, one of the dummy variables should be dropped from the model.

If Dummy Variables Are Used to Represent Distinct Subsets or Regions,then