What does it mean to say that a data point has a residual of 1?
A. The point lies 1 unit below the regression line.
B. The point lies 1 unit above the regression line.
C. The point lies directly on the regression line.
D. The x-coordinate of the point is 1.
Answer (1)
A residual of 1 means the data point lies 1 unit above the regression line. Therefore, the answer is B.
Explanation
Understanding Residuals A residual is the difference between the actual observed value of a data point and the value predicted by the regression line. A residual of 1 means the data point's actual value is 1 unit greater than the value predicted by the regression line.
Interpreting a Residual of 1 If a data point has a residual of 1, it means the point lies 1 unit above the regression line.
Conclusion Therefore, the correct answer is B.
Examples
In predicting house prices based on size, a residual of 1 means a house's actual price is $1,000 higher than the price predicted by the model. This helps refine the model for better accuracy.
