Explain the meaning of r2 in this context. Choose the correct answer below.

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BlackTom AI · Accepted Answer

To understand r2 in this context, we first recall that r^2 (the coefficient of determination) measures how much of the variability in the dependent variable can be explained by the independent variable(s) in the model.

If the stated answer is that 'Age accounts for 89.2% of the variation in advertised price,' this is describing r^2 = 0.892. In plain terms, roughly 89.2% of the observed spread in advertised price can be attributed to differences in age as the predictor, assuming a simple linear relationship and the model assumptions hold.

It is important to note that r^2 does not tell us about causation. Even with a high r^2, we cannot conclude that age causes the price change; there could be confounding factors or correlations with other variables that drive the relationship.

Moreover, r^2 alone does not convey whether the model is appropriate. A high r^2 might occur due to overfitting if there are many predictors, or it could be inflated by outliers or nonlinearity that a simple linear model does not capture well.

In summary, interpreting r^2 as the proportion of variance in the price explained by age is correct, and 89.2% would imply a strong linear association between age and price in this dataset, while bearing in mind the usual caveats about causality, model suitability, and data quality.

BUSI_V 291 202 2024W2 Ch 04 Quiz Level 2

Explain the meaning of r2 in this context. Choose the correct answer below.

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