A regression model produces residuals that exhibit a funnel shape when plotted against fitted values. Which diagnostic does this indicate and what remediation is recommended?
Select an answer to reveal the explanation.
Short Explanation
Here's the deal — b is correct because a funnel-shaped residual plot (variance increasing with fitted values) is the hallmark of heteroscedasticity. Remediation includes log or Box-Cox transformation of the target, or weighted least squares where weights are inversely proportional to variance.
Full Explanation
B is correct because a funnel-shaped residual plot (variance increasing with fitted values) is the hallmark of heteroscedasticity. Remediation includes log or Box-Cox transformation of the target, or weighted least squares where weights are inversely proportional to variance. A (multicollinearity) presents as inflated standard errors, not funnel residuals. C (autocorrelation) appears as patterns in residuals ordered by time, not by fitted values. D (high leverage) identifies individual influential points, not a systematic variance pattern.