Question

In: Statistics and Probability

Let x be the average number of employees in a group health insurance plan, and let...

Let x be the average number of employees in a group health insurance plan, and let y be the average administrative cost as a percentage of claims.

x 3 7 15 40 71
y 40 35 30 28 19

(c) Use a calculator to verify that Σx = 136, Σx2 = 6924, Σy = 152, Σy2 = 4870, and Σxy = 3284. Compute r. (Round your answer to three decimal places.)

r =

Solutions

Expert Solution

Correlation coefficient = r = [n∑xy - ∑x∑y]/sqrt[(n∑x^2 – (∑x)^2)*(n∑y^2 – (∑y)^2)]

So, by using given values, we have

r = [n∑xy - ∑x∑y]/sqrt[(n∑x^2 – (∑x)^2)*(n∑y^2 – (∑y)^2)]

r = [5*3284 - 136*152]/sqrt[(5*6924 – (136)^2)*(5*4870– (152)^2)]

r = -4252/4482.243

r = -0.94863

r = -0.949


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