In regression analysis, if observed cost value is 62 and predicted cost value is 29, then disturbance term would be

33
91
81
43

The correct answer is A. 33.

The disturbance term is the difference between the observed value and the predicted value. In this case, the observed value is 62 and the predicted value is 29, so the disturbance term is 62 – 29 = 33.

The disturbance term is also known as the error term or the residual. It is a random variable that represents the unobserved factors that affect the dependent variable. The disturbance term is assumed to be normally distributed with mean 0 and constant variance.

The disturbance term is important because it allows us to make inferences about the relationship between the independent and dependent variables. If the disturbance term is not normally distributed or has a constant variance, then the inferences we make about the relationship between the independent and dependent variables may not be accurate.

Here is a brief explanation of each option:

  • Option A: 33. This is the correct answer. It is the difference between the observed value and the predicted value.
  • Option B: 91. This is the sum of the observed value and the predicted value. It is not the disturbance term.
  • Option C: 81. This is the square of the disturbance term. It is not the disturbance term.
  • Option D: 43. This is the square root of the disturbance term. It is not the disturbance term.
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