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AI Associate AI Fundamentals Practice Question

A model trained on CRM data predicts customer lifetime value (CLV) with high accuracy, but when deployed, predictions are significantly off for new customer segments. What is the most likely cause?

Answer choices

Why each option matters

Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.

Correct answer & explanation

The training data was not representative of the new segments

If the training data was not representative of the new segments, the model will not generalize, leading to poor out-of-sample performance.

Answer analysis

Option-by-option breakdown

For each option: why learners choose it and why it is or isn't the right answer here.

  • Feature engineering was insufficient for the original segments

    Why it's wrong here

    Insufficient features would likely cause poor performance across all segments.

  • The model is overfitting to the training data

    Why it's wrong here

    Overfitting would affect all new data, not just specific segments, and would likely show lower overall accuracy.

  • The model architecture is too simple

    Why it's wrong here

    A simple model might underfit generally, not just on new segments.

  • The training data was not representative of the new segments

    Why this is correct

    Unrepresentative training data leads to poor generalization for unseen segments.

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