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A residual is the difference
between the observed and model-predicted values of the dependent
variable. The residual for a given product is the observed value
of the error term for that product.
A histogram or P-P plot of the residuals will help you to check
the assumption of normality of the error term.
The shape of the histogram should approximately follow
the shape of the normal curve. This histogram is acceptably
close to the normal curve.
The P-P plotted residuals should follow the
45-degree line. Neither the histogram nor the P-P plot indicates
that the normality assumption is violated.
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Checking the Normality of the Error Term |