The following table shows the dummy variables in the retail example for six cases from the data table. The table includes the redundant third dummy variable that identifies rural locations.
a. Which cases are suburban locations? Which are the urban locations?13
b. Cover the last column, the dummy for rural locations. Can you identify these locations from the first two dummy variables?14
c. Cover the first column, the dummy for suburban locations. Can you identify these locations from the other two?15
d. What property of these columns makes them redundant? That is, what property of these columns makes it possible for us to recover any column from the other two?16
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