Chapter 47. Modeling Nonlinearities and Interactions
What does it mean when we say that an independent variable has a nonlinear effect on a dependent variable?
What does it mean when we say that the effects of two independent variables on a dependent variable interact?
How can we test for the presence of nonlinearity and interaction in a regression?
What does it mean when we say that an independent variable has a nonlinear effect on a dependent variable?
An independent variable will often influence a dependent variable through a nonlinear relationship. For example, if we try to predict product sales using an equation such as Sales = 500 - 10* Price, Price influences Sales linearly. This equation indicates that a unit increase in Price will (at any ...
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