Explain the uses of limitations of regression analysis
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Limitations :
It is assumed that the cause and effect relationship between the variables remains unchanged. This assumption may not always hold good and hence estimation of the values of a variable made on the basis of the regression equation may lead to erroneous and misleading results.The functional relationship that is established between any two or more variables on the basis of some limited data may not hold good if more and more data are taken into consideration. For example, in case of the Law of Return, the law of diminishing return may come to play, if too much of inputs are used with ca view to increasing the volume of output.It involves very lengthy and complicated procedure of calculations and analysis.It cannot be used in case of qualitative phenomenon viz. honesty, crime etc.
It is assumed that the cause and effect relationship between the variables remains unchanged. This assumption may not always hold good and hence estimation of the values of a variable made on the basis of the regression equation may lead to erroneous and misleading results.The functional relationship that is established between any two or more variables on the basis of some limited data may not hold good if more and more data are taken into consideration. For example, in case of the Law of Return, the law of diminishing return may come to play, if too much of inputs are used with ca view to increasing the volume of output.It involves very lengthy and complicated procedure of calculations and analysis.It cannot be used in case of qualitative phenomenon viz. honesty, crime etc.
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