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Answer: k - 1

Step-by-step explanation:

Dummy variables are used values belonging to a certain variable are independently used as column data taking up values of either 0 or 1.

To code categorical variables, the number of dummy variables created is represented by the formular : k - 1. Where k is the number of levels.

For instance, a variable with 7 levels will be represented as (7 - 1) = 6 different dummy variables. The last variable (which is supposed to be the 7th) is captured by the intercept (showcased when all variables have a value of 0).

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The number of dummy variables that will be required when a categorical variable has levels is: d. k - 1

Recall the general rule that applies in the number of dummy variables needed for categorical variables:

  • For a categorical variables having levels, the general rule is to use a number of dummy variables that is 1 less than the categories.

For example, six (6) dummy variables will be used when dealing with daily data.

Therefore, the number of dummy variables that will be required when a categorical variable has levels is: d. k - 1

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