Question

In the following residual plot, consider the point that is indicated by the arrow. Which of the following statements must be true about the individual represented by that point?

1) The actual value of the explanatory variable is greater than the observed value of the response variable.
2) The actual value of the explanatory variable is greater than its predicted value.
3) The actual value of the response variable is less than its predicted value.
4) The actual value of the response variable is greater than its predicted value.

Answer 1

The actual value of the response variable is less than its predicted value.

Step-by-step explanation:

In a residual plot, if a data point lies above the line, the residual is positive. This means that the line underestimates the actual value of the response variable. Therefore, statement 3) is true, as the actual value of the response variable is less than its predicted value.