Card 133 / 180: The figure below shows a plot of the residuals from a linear regression. Notice the two residuals marked A and B. Which of the following below best describes what these residuals reveal about the fitted regression line?
A)
Residuals A and B represent positive outliers in the sample, which results in the slope being over-estimated (it is larger than the true relationship between x and y).
B)
Residuals A and B represent negative outliers in the sample, which results in the slope being under-estimated (it is smaller than the true relationship between x and y).
C)
Residuals A and B represent outliers in the sample, which results in the line of best fit.
D)
Residuals A and B represent observations in the sample, which results in the line of best fit.
Answer:
A) Residuals A and B represent positive outliers in the sample, which results in the slope being over-estimated (it is larger than the true relationship between x and y).
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