5
Question
The demand for a good at different price points is given in the below. Find the correlation coefficeint between price and quantity demanded.
Price (P)Quantity (Q)1012020105308540555040
The demand for a good at different price points is given in the below. Find the correlation coefficeint between price and quantity demanded.
Price (P)Quantity (Q)1012020105308540555040
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Solution
The correct option is D -0.99
xyx−¯x(x−¯x)2(y−¯y)(x−¯x)2(x−¯x)(y−¯y)10120−20400391521−78020105−1010024576−2403085004160405510100−26676−260504020400−411681−820∑=1000∑=4470∑=−2100
¯x=∑xn=1505=30
¯y=∑yn=4055=81
r=∑ni=1(xi−¯x)(yi−¯y)√∑ni=1(xi−¯x)2√∑ni=1(yi−¯y)2=−2100√1000×4470=−21002114.24=−0.99
-0.99
xyx−¯x(x−¯x)2(y−¯y)(x−¯x)2(x−¯x)(y−¯y)10120−20400391521−78020105−1010024576−2403085004160405510100−26676−260504020400−411681−820∑=1000∑=4470∑=−2100
¯x=∑xn=1505=30
¯y=∑yn=4055=81
r=∑ni=1(xi−¯x)(yi−¯y)√∑ni=1(xi−¯x)2√∑ni=1(yi−¯y)2=−2100√1000×4470=−21002114.24=−0.99
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