Negative residuals in data points indicate
Optym technical mcq question, verified with a worked answer. Free to practise - no sign-up.
Negative residuals in data points indicate**
Show answer & explanation
Answer: B. B) Data points below regression line
Residual is defined as actual value minus predicted value (e = y - y_hat). When residual is negative, y < y_hat, meaning the observed data point lies below the regression line.
Step-by-step Derivation:
Step 1: Residual formula: Residual = y_actual - y_predicted.
Step 2: If Residual < 0, then y_actual < y_predicted.
Step 3: On a Cartesian scatter plot, this means the observed point has a lower y-value than the fitted regression line (lies below the line).