The residual value of a data point is calculated as:
Residual = actual value - predicted value
where the actual value is the value of the data point, and the predicted value is predicted by the regression line.
Them if the residual is equal to 1; this means that the actual value is one unit bigger than the predicted value, then the actual value is one unit above the predicted value.
So the right answer is D "The point lies one unit above the regression line"
