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While I do think this to be obvious that, since the distances to the closest centre naturally reduces with an increase in K implying a reduction in SSE with larger K, I was wondering why this is considered an objective function. How can I decide on the right value of K, if for an increase in K, SSE is bound to decrease. Thank you

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Just realized, the intention is to plot these out, look for an elbow to be formed and then base your decision of K on that.