Question

f there are m category classifications, there needs to be dummy variables in the regression equation.

		m + 1
		(m + 1)/2
		m - 1
		(m - 1)/2

Answer 1

Since a dummy variable can be defined as a numerical variable used in regression analysis to represent subgroups of the sample in the study. In research, a dummy variable is usually used to distinguish different treatment groups. This is a qualitative variable.

The dummy variable trap can be defined as a situation in which independent variables are multicollinear. It means that two or more variables are correlated with high degree. For avoiding this problem, (m-1) dummy variable are introduced.

If there is m category, then m-1 variables are taken to avoid dummy variable trap.

Hence it can be said that if there are m category classifications, there needs to be (m-1) dummy variables in the regression equation.

Hence option third is the correct answer.