Question

The following pairs give the value of variables of capital employed and profit.

Capital employed (in crores of ₹ ) (X)	:	2	3	5	6	8	9
Profit (in lacs of ₹ ) (Y)	:	6	5	7	8	12	11

(a) Make a scatter diagram.
(b) Do you think that there is any correlation between profit and capital employed? Is it positive or negative ? Is it high or low?
(c) By graphic inspection , draw an estimating line.

Answer 1

a) Scatter Diagram





b) The points obtained on the scatter diagram lie close to each other and reflect an upward trend. Thus, there exists a high degree of positive correlation between capital employed and profits earned.

c)