Question
Calculate correlation co-efficient by step deviation method.
|
Price (Rs.) |
5 |
10 |
15 |
20 |
25 |
|
Demand (Kg.) |
40 |
35 |
30 |
25 |
20 |
Solution
Calculation of correlation:
Co-efficient by step deviation method
|
X |
dX (.X-A) |
dX’ C1 =5 |
dXz |
Y |
dY (Y-A) |
dY'C2 = 5 |
dY'2 |
dX'dY' |
|
5 |
– 10 |
–2 |
4 |
40 |
10 |
2 |
4 |
–4 |
|
10 |
–5 |
– 1 |
1 |
35 |
5 |
1 |
1 |
– 1 |
|
15 |
0 |
0 |
0 |
30 |
0 |
0 |
0 |
0 |
|
20 |
5 |
1 |
1 |
25 |
–5 |
– 1 |
1 |
– 1 |
|
25 |
10 |
2 |
4 |
20 |
– 10 |
-2 |
4 |
–4 |
|
N = 5 |
Σ dX' = 0 |
Σ dX'2 = 10 |
N = 5 |
Σ dY' = 0 |
Σ dY'2 = 10 |
ΣdX' dY' = –10 |
A.M. of X series = 15 A.M. of Y series = 30
There is a perfectly negative correlation between price and quantity demanded.
