Question

What are influential observations? i) Observations with large residuals or low leverage. ii) Observations with large residuals or high leverage. iii) Observations with small residuals or low leverage. iv) Observations with small residuals or high leverage.

Answer 1

Residual = Obseved value - predicted value

If residual is high , it means that Observed value is far away from the predicted value using regression line

So high residual value is an influential observation.

The leverage of an observation is based on how much the observation's value on the predictor variable (x) differs from the mean of the predictor variable.

If the leverage is high, the more potential it has to be an influential observation.

Option ii) Observations with large residuals or high leverage.