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    Statisics - Scattered diagrams and linear correlation

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    The following data are based on information from Domestic affairs. Let X be the average number of employees in a group helh insurance plan, and let Y be the average administrative cost as a percentage of claims.

    X: 3, 7, 15, 35, 75
    Y: 40, 35, 30, 25, 18

    a) Make a scatter diagram and draw the line you think best fits the data.

    b) Would you say the correlation is low, moderate, or strong? Positive or negative?

    c) Use a calculator to verify that Ex = 135. Ex^2 = 7133, Ey = 148, Ey^2 4674, and Exy = 3040. Compare r. As x increases, does the value of r imply that y should tend to increase or decrease? Explain.

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    Solution Summary

    The expert examines the scattered diagram and linear correlations. Whether the correlation is low, moderate or strong are determined. Neat and step-by-step solutions are provided. Scatter diagram is shown.