Question

Why is the first step in the regression model evaluation so important?

Multiple Choice

• We desire the explanatory power of the model to be at least 84% of the variation in the dependent variable.

• We want the relationship to be statistically significant at the desired level of confidence.

• We would never want to use a relationship that does not conform to business/economic logic.

• We need to determine if the Durbin-Watson test is within our range of zero to four to rule out serial correlation.

Answer 1

We would never want to use a relationship that does not conform to business/economic logic.

So that's why the first step in the regression model evaluation is so important.

Therefore, We would never want to use a relationship that does not conform to business/economic logic is correct option.