Question

Suppose you have collected the following sample data from twenty-six randomly selected Dallas area families regarding their Weekly Expenditures on Video Rentals and Weekly Expenditures on Dining Out:

Observation Number	Weekly Expenditures
	Video Rentals	Dining Out
1	$12	$28
2	$12	$27
3	$6	$32
4	$13	$32
5	$7	$25
6	$10	$24
7	$8	$27
8	$4	$20
9	$4	$32
10	$13	$35
11	$5	$30
12	$9	$22
13	$12	$31
14	$9	$25
15	$12	$28
16	$4	$34
17	$14	$36
18	$10	$24
19	$5	$29
20	$18	$42
21	$15	$41
22	$6	$26
23	$6	$28
24	$4	$40
25	$11	$21
26	$9	$24

Explain your answers below in detail (use analytical tools such as correlation and regression when necessary)

Q1: What is the relationship between weekly expenditures of video rentals and dining out?

Q2: If you were to reach out to these households, what other data would you be interested in collecting in order to understand their consumption behavior?

Q3: What other types of products do you think these families would be interested in?

Answer 1

Q1: We will use correlation test to find out the relationship between weekly expenditures of video rentals and dining out. You can enter the data into excel and find out the correlation coefficient using the CORREL function.

Correlation coefficient (r) = 0.32

We can say that there is a weak relationship between the two variables. There is no such consumption pattern between the two variables.

Q2. If we were to reach out to these households, we might be interested in collecting the weekly expenditure data on Experiences, Transportation, Education, Apparel & other services as we already have some data on Entertainment (Video Rentals) and Food (dining out).

Q3. The families might be interested in other experiences like going for a movie, attending different events or shows etc. As they are interested in video rentals, it means that they are technologically sound and might be interested in different subscriptions online like news, books etc.