Data on labor productivity and unit labor costs were obtaine

Data on labor productivity and unit labor costs were obtained for the retail industry from 1987 through 2006 (Bureau of Labor Statistics). A regression was estimated to describe the linear relationship between the two variables. What does the plot of residuals versus predicted values suggest?

Select one:

a. The data are not normal.

b. The linearity condition is not satisfied.

c. The equal spread condition is not satisfied.

d. Both A and B.

e. Both B and C.

Solution

c. The equal spread condition is not satisfied.

d. Both A and B.