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Step: 1
a) To calculate the correlation coefficient between sales and income, we can use the
formula for Pearson's correlation coefficient (also known as the Pearson correlation
coefficient or Pearson's r). The formula is:
²ȳ²
�=Σ((�-�̄)(�-ȳ))Σ(�-�̄)²⋅Σ(�-ȳ)²
Explanation
Where: - x and y are the variables (sales and income, respectively) - x̄ and ȳ are the
means of x and y, respectively - Σ denotes the sum of the values
First, let's calculate the means of sales and income: Mean of sales (x̄):
4500+1500+2200+3200+100+81+86+98+2000+1800+2400+180012=1595.
83
(x - x̄)²:
[(151-774.33)⋅(4500-1595.83)]+[(87-774.33)⋅(1500-1595.83)]+...+[(71-774
.33)⋅(1800-1595.83)]=-1276892.17
(y - ȳ)²:²²²
[(151-774.33)²]+[(87-774.33)²]+...+[(71-774.33)²]=8987365.33
Now we can substitute these values into the correlation coefficient formula: Using
a calculator or software, the correlation coefficient (r) is -0.537. ²²²
[(4500-1595.83)²]+[(1500-1595.83)²]+...+[(1800-1595.83)²]=10858857.83
�=-1276892.178987365.33⋅10858857.83
Step: 2
2. Calculate the regression using the "LINEST" function in Excel or the "TREND"
function in Google Sheets. This function provides the slope, intercept, and other
relevant statistics.
3. Use the slope and intercept values to form the regression equation. c) The slope
coefficient in the regression equation represents the change in sales (dependent
variable) for every unit change in income (independent variable). In this case, it
represents how much the sales are expected to increase or decrease for every
increase or decrease in the minimum regional income per month. For example, if the
slope coefficient is 0.5, it means that for every $1,000 increase in the minimum
regional income per month, the sales are expected to increase by $500.
Conversely, if the slope coefficient is -0.5, it means that for every $1,000 increase in
the minimum regional income per month, the sales are expected to decrease by
$500.
d) To predict the sales for a city with an average income of $2,700,000, we can use
the regression equation. Assuming you have the regression equation, you can
substitute the average income value into the equation to obtain the predicted sales
value. For example, if the regression equation is:
Sales = (in thousands of Dollars) So the predicted sales for a city with an average
income of would be .
50+0.2⋅2700=50+540=590
$2,700,000
$590,000
Explanation
Remember, the actual regression equation and predicted sales value may vary based
on the analysis you conducted using the statistical software. Make sure to use the
appropriate regression results based on your analysis.
Final Answer
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