Residual plots and choosing between linear and exponential models

What this note covers

1. The residual: definition, sign and units
2. Calculating residuals by hand
3. Constructing and scaling a residual plot
4. Reading a residual plot: the decision rule
5. Why r² alone cannot make this decision
6. Making the switch: from a curved residual plot to an exponential model
7. Worked example: residuals decide the model
8. How this is examined in the SACE paper — and what separates a top answer

8 sections · 12 key terms & formulas · 6 common mistakes