A professor of economics wants to study the relationship between income (y in ex

Question

A professor of economics wants to study the relationship between income (y in exist1,000s) and education (x in years). A random sample eight individuals is taken and the results are shown below. Education x: years: 16 11 15 8 12 10 13 14 Income y: exist1,000s: 58 40 55 35 43 41 52 49 Notel Px = 99: Py = 373: Pxy = 4: 761;Px2 = 1: 275: Py2 = 17: 849. a) Calculate r, the correlation coecient b) What is the interpretation for the correlation coecient r in part a). Circle you answer a. Education and Income are strong positive correlated. b. Education and Income are intermediate positive correlated. c. Education and Income are weak positive correlated. d. No correlation between Education and Income. c) What is the equation of the regression line for this data? d) If a person studied 11 years what would you predict for her salary?

Explanation / Answer

a]

Correlation coeficient = r = 0.96 ( calculated by using Excel command " =CORREL(D2:D9,E2:E9) ".

b]

Positive correlation is a relationship between two variables in which both variables move in tandem.

here education and income are strong possitive correlated.

c]

regression equation of data is: Income ( Y-hat) = 10.62 + 2.91* Education (X).

d]

if X = 11, then Y-hat = 10.62 + 2.91*11 = 42.63.

means if person studied 11 years then her salary is $ 42630.

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