Explanation:
Variance Inflation Factor (VIF) interpretation:
Analysis:
Therefore, serious multicollinearity issues requiring correction are indicated for Variable 2 and Variable 3.
Note: While the question options only show A and B, the correct answer should be that both Variable 2 and Variable 3 have serious multicollinearity issues based on standard VIF interpretation thresholds.
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An analyst computes the following variance inflation factors (VIFs) for the independent variables in a regression model:
| Independent Variable | VIF |
|---|---|
| Variable 1 | 1 |
| Variable 2 | 7 |
| Variable 3 | 12 |
Serious multicollinearity issues requiring correction are indicated for:
A
Variable 1 only.
B
Variable 3 only.
C
Variable 2 and Variable 3.