Business Statistics, Cdn. Ed.

, 3e (Sharpe)
Chapter 6: Scatterplots, Association, and Correlation

Short Answer - Quiz A

1) In discussing how its customers use online services, a bank manager noted "there seems to be a strong
correlation between the use of the online bill paying feature and gender". Comment on this statement.
Answer: There may be an association between the use of online bill paying and gender, but these
variables are both categorical so they cannot be correlated.
L.O.: 2

2) The following scatterplot shows a relationship between x and y that results in a correlation coefficient
of r = 0. Explain why r = 0 in this situation even though there appears to be a strong relationship between
the x and y variables.

Answer: The correlation measures the direction and strength of a linear association between two
variables. This relationship is strong but not linear so the correlation coefficient is zero.
L.O.: 2

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3) For each of the following scenarios, indicate which is the predictor variable and which is the response
variable.
a. A study examined consumption levels of oil and carbon dioxide emissions for a sample of
municipalities.
b. Data were collected on job performance rating and hours of training for a sample of employees at a
telecommunications repair facility.
c. Salary data as well as years of managerial experience were collected for a sample of executives in the
high tech industry.
Answer:
a. Oil consumption level is the predictor variable, carbon dioxide emissions is the response variable.
b. Job performance rating is the response variable, and hours of training is the predictor variable.
c. Salary is the response variable, and years of managerial experience is the predictor variable.
L.O.: 1

4) The following scatterplot shows monthly sales figures (in units) and number of months of experience
on the job for a sample of 18 salespeople.

a. Describe the association between monthly sales and level of experience.

b. Do these data satisfy the conditions for computing a correlation coefficient? Explain.
c. Estimate the correlation. Which value of r looks most probable: 0.1, 0.3, or 0.9?
Answer:
a. Direction: positive; form: straight; strength: quite strong scatter around a generally straight form;
unusual features: no outliers.
b. Yes, variables are quantitative, the relationship is straight enough, and there are no apparent outliers.
c. There is a quite strong and positive linear relationship between monthly sales and level of experience.
The correlation coefficient is approximately 0.9.
L.O.: 1, 2

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5) Shown below is a correlation table showing correlation coefficients between stock price, earnings per
share (EPS), and the price/earnings (P/E) ratio for a sample of 19 publicly traded companies.

Correlation: Stock Price, EPS, P/E

Stock Price EPS P/E

Stock Price 1.000
EPS 0.875 1.000
P/E 0.323 -0.111 1.000

a. What is the correlation between stock price and EPS? Interpret.

b. What is the correlation between stock price and P/E? Interpret.
c. What is the correlation between EPS and P/E? Interpret.
Answer:
a. 0875, positive and strong
b. 0.323, positive and weak
c. -0.111, negative and very weak
L.O.: 2

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6) Based on the scatterplots shown below, describe the association between x and y.
a.

b.

Answer:
a. The association between x and y is positive and moderately strong.
b. There is no apparent relationship between x and y.
L.O.: 1

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Short Answer - Quiz B

1) In commenting on the increase in home foreclosures, a news reporter stated "there appears to be a
strong correlation between home foreclosures and job loss of the head of household." Comment on this
statement.
Answer: There may be an association between home foreclosures and the head of household losing
his/her job, but these variables are both categorical so they cannot be correlated.
L.O.: 2

2) For each of the following scenarios, indicate which is the predictor variable and which is the response
variable.
a. A supermarket chain gathers data on the amount they spend on promotional material (specials,
coupons, etc.) and sales revenue generated each quarter.
b. Government sponsored research investigated the relationship between the number of hours
individuals spend on the Internet and age.
c. A real estate association conducted a study on home prices and economic strength for different
regions of Canada.
Answer:
a. Amount spent on promotional material is the predictor variable, and sales revenue is the response
variable.
b. Number of hours spent on the Internet is the response variable, and age is the predictor variable.
c. Home price is the response variable, and economic strength is the predictor variable.
L.O.: 1

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3) The following scatterplot shows Internet Usage and PC household adoption rate (per 100 inhabitants)
for a sample of 15 countries.

a. Describe the association between Internet usage and PC household adoption rate.
b. Do these data satisfy the conditions for computing a correlation coefficient? Explain.
c. Estimate the correlation. Which value of r looks most probable: 0.1, 0.3, or 0.9?
Answer:
a. Direction: positive; form: straight; strength: strong scatter around a generally straight form; unusual
features: no outliers.
b. Yes, variables are quantitative, the relationship is straight enough, and there are no apparent outliers
(although the concentration of points at the lower end and higher end of PC household adoption rate
may inflate the correlation).
c. There is a strong linear and positive relationship between Internet usage and PC household adoption
rate. The correlation coefficient is about 0.9.
L.O.: 1, 2

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4) Shown below is a correlation table showing correlation coefficients between population (in millions),
PC household adoption rate and cell phone adoption rate for a sample of 16 countries.

Correlation: PC Adoption, Cell Phone Adoption, Population

Cell Phone
PC Adoption Adoption Population
PC Adoption 1.000
Cell Phone Adoption 0.671 1.000
Population 0.376 0.016 1.000

a. What is the correlation between PC household adoption rate and population? Interpret.
b. What is the correlation between cell phone adoption rate and population? Interpret.
c. What is the correlation between PC household adoption rate and cell phone adoption rate? Interpret.
Answer:
a. 0.376, positive and weak.
b. 0.016, positive and very weak.
c. 0.671, positive and moderately strong.
L.O.: 2

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5) A consumer research group investigating the relationship between the price of meat (per kilogram)
and the fat content (grams) gathered data that produced the following scatterplot.

a. Describe the association between the price of meat and fat content.
b. Estimate the correlation. Which value of r looks most probable: -0.9, -0.5, or -0.1?
c. If the point in the lower left hand corner ($2.00 per kilogram, 6 grams of fat) is removed, would the
correlation become stronger, weaker, or remain the same? Explain.
Answer:
a. Direction: negative; form: moderate straight; strength: moderate; unusual features: one point in the
lower left hand corner stands away from the overall pattern.
b. There is a moderate linear and negative relationship between the price of meat and fat content. The
correlation coefficient is around -0.5.
c. It would become stronger because correlation is sensitive to unusual observations. This point stands
out of the overall pattern.
L.O.: 1, 2

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6) Based on the scatterplots shown below, describe the association between x and y.
a.

b.

Answer:
a. There is no apparent relationship between x and y.
b. There is a very strong positive linear relationship between x and y.
L.O.: 1

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Multiple Choice - Quiz C

1) A study examined consumption levels of oil and carbon dioxide emissions for a sample of
municipalities. The response variable in this study is
A) oil brands.
B) oil consumption levels.
C) carbon dioxide emissions.
D) municipalities.
E) oil prices.
Answer: C
L.O.: 1

2) A supermarket chain gathers data on the amount they spend on promotional material (specials,
coupons, etc.) and sales revenue generated each quarter. The predictor variable is
A) sales revenue.
B) amount spent on promotional material.
C) number of coupons offered.
D) supermarket chains.
E) number of quarter.
Answer: B
L.O.: 1

3) Government sponsored research investigated the relationship between the number of hours
individuals spend on the Internet and age. Which of the following statements is true?
A) Age is the predictor variable and number of hours spent on the Internet is the response variable.
B) Government is the predictor variable and the number of hours spent on the Internet is the response
variable.
C) Age is the response variable and the number of hours spent on the Internet is the predictor variable.
D) Age is the predictor variable and government sponsored research is the response variable.
E) Number of individuals is the predictor variable and government sponsored research is the response
variable.
Answer: A
L.O.: 1

4) In discussing how its customers use online services, a bank manager noted "there seems to be a strong
correlation between the use of the online bill paying feature and gender". Which of the following is true
regarding this statement?
A) The correlation between the use of online bill paying feature and gender is negative.
B) The correlation between the use of online bill paying feature and gender is positive.
C) There may be an association between the use of online bill paying feature and gender, but these
variables are both categorical so they cannot be correlated.
D) More males will bank online compared with females.
E) More females will bank online compared with males.
Answer: C
L.O.: 2

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Consider the following to answer the question(s) below:

The following scatterplot shows monthly sales figures (in units) and the number of months of experience
on the job for a sample of 18 salespeople.

5) The association between monthly sales and number of months of experience can be described as
A) positive and weak.
B) negative and weak.
C) negative and strong.
D) positive and strong.
E) nonlinear.
Answer: D
L.O.: 1

6) The correlation coefficient between monthly sales and number of months of experience is most likely
A) -0.235.
B) 0.
C) 0.180.
D) -0.914.
E) 0.914.
Answer: E
L.O.: 2

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Consider the following to answer the question(s) below:

A consumer research group investigating the relationship between the price of meat (per kilogram) and
the fat content (grams) gathered data that produced the following scatterplot.

7) Which best describes the association between the price of meat and fat content?
A) Negative, moderately strong, linear
B) Negative, very weak, linear
C) Positive, strong, linear
D) Positive, weak, linear
E) Nonlinear
Answer: A
L.O.: 1

8) If the point in the lower left hand corner ($2.00 per kilogram, 6 grams of fat) were removed, the
correlation would most likely
A) remain the same.
B) become stronger negative.
C) become weaker negative.
D) become positive.
E) become nonlinear.
Answer: B
L.O.: 1

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9) Which of the following statements about the relationship associated with the given scatterplot is true?

A) The scatterplot indicates strong linear correlation and r is about 0.70.

B) The scatterplot indicates strong linear correlation and r is about -0.70.
C) The scatterplot indicates moderate linear correlation and r is about 0.50.
D) The scatterplot indicates moderate linear correlation and r is about -0.50.
E) There is a certain association, but not linear.
Answer: E
L.O.: 2

10) Shown below is a correlation table showing correlation coefficients between stock price, earnings per
share (EPS), and the price/earnings (P/E) ratio for a sample of 19 publicly traded companies. Which of the
following statements is false?

Correlation: Stock Price, EPS, P/E

Stock Price EPS P/E

Stock Price 1.000
EPS 0.875 1.000
P/E 0.323 -0.111 1.000

A) Since r = 0.323 for P/E and Stock Price, there is a relatively weak positive correlation between P/E and
Stock Price.
B) The strongest correlation is between EPS and Stock Price.
C) There is a weak negative correlation between P/E and EPS.
D) The strongest correlation is between P/E and Stock Price.
E) The weakest correlation is between P/E and EPS.
Answer: D
L.O.: 1, 2

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11) A student wants to investigate the association between number of cases of mosquito-borne diseases
and ice cream sales in the campus area. Which of the following statements is true?
A) It looks like there is a strong positive correlation.
B) It looks like there is a strong negative correlation.
C) The variables are not quantitative, so the student reports about a strong positive association.
D) The variables are not quantitative, so the student reports about nonlinear association.
E) There is a lurking variable, weather, in this study. As the weather grows warmer, more people buy ice
cream and more people go outside.
Answer: E
L.O.: 3

12) If the correlation coefficient for the variables is determined to be 0.70, which of the following is known
to be true?
A) The relationship between the variables is nonlinear.
B) The correlation is negative.
C) The scatterplot for the variables will be upward sloping from left to right.
D) The scatterplot for the variables will be downward sloping from left to right.
E) The scatterplot shows a curvilinear pattern.
Answer: C
L.O.: 1, 2

13) If two variables have a curvilinear relationship, which of the following is true?
A) The correlation coefficient will not be able to measure strength of the association.
B) The correlation coefficient will be equal to-1.
C) The correlation coefficient will be equal to 1.
D) The scatter plot is useless to indicate that the relationship is curved.
E) Only outliers make the curvilinear pattern.
Answer: A
L.O.: 2

14) Which of the following statements is correct?

A) A scatter plot showing two variables with a positive linear relationship will have all points on a
straight line.
B) The stronger the linear positive relationship between two variables, the closer the correlation
coefficient will be to -1.
C) Two variables that are uncorrelated with one another may still be related in a nonlinear manner.
D) A curvilinear relationship will always have a correlation coefficient of exactly zero.
E) The stronger the linear and negative association between two variables, the closer the correlation
coefficient will be to +1.
Answer: C
L.O.: 1, 2

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15) Assume that a medical research study found a correlation coefficient of -0.73 between regular use of
sunscreen and the skin cancer rate. This could be interpreted to mean that
A) the greater the regular use of sunscreen, the lower the person's chances of getting skin cancer.
B) skin cancer is caused by not using sunscreen regularly.
C) the greater the regular use of sunscreen, the higher the person's chances of getting skin cancer.
D) skin cancer can be prevented by regular use of sunscreen.
E) the lower the regular use of sunscreen, the lower the person's chances of getting skin cancer.
Answer: A
L.O.: 2, 3

16) A study was done in which the daily temperature and the number of traffic accidents within the city
were recorded. The standard deviations for the samples are 13.13 for temperature and 2.55 for accidents.
These sample data are shown as follows:

Temperature Traffic accidents

33 7
13 4
24 9
20 10
-2 5

Given these data, the sample correlation coefficient is approximately

A) 0.55.
B) -0.12.
C) 0.39.
D) -0.55.
E) -0.39.
Answer: A
L.O.: 2

17) A perfect correlation between two variables will always produce which of the following?
A) a correlation coefficient of -1.0
B) a scatterplot with a pattern running from lower left to upper right
C) a correlation coefficient of 1.0
D) a scatterplot where all points lie on a single straight line
E) a scatterplot with a pattern running from upper left to lower right
Answer: D
L.O.: 1, 2

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18) Consider the following sample data. The standard deviations from the data are 3.67 for Y, and 45.28
for X. These sample data are shown as follows:

Y X
10 100
7 110
12 90
15 200
16 150

Given this data, the sample correlation is approximately

A) 0.68.
B) 0.54.
C) 0.16.
D) 0.39.
E) 0.20.
Answer: A
L.O.: 2

19) In a university statistics course a correlation coefficient of -0.8 was found between the number of
classes missed and the course grade. This can be interpreted to mean that
A) the more classes missed, the lower the course grade.
B) a lower course grade is caused by missing more classes.
C) the correlation is strong and positive.
D) a higher grade can be achieved by missing fewer classes.
E) the more classes missed, the higher the course grade.
Answer: A
L.O.: 2, 3

20) The University recently sampled five full time students who work off campus in order to look at their
GPA and their work schedules. The standard deviation for GPA is 0.91 and the standard deviation for
hours worked is 6.78. These sample data are shown as follows:

GPA HOURS
9.1 26
8.9 30
10.1 12
9.3 20
7.6 22

Given these data the sample correlation is

A) -0.49.
B) -0.39.
C) -0.42.
D) -0.34.
E) -0.36.
Answer: A
L.O.: 2

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