B.Com. (Hons.

) IV Semester
Business Statistics
Important Questions from UNIT-3

Q1. Correlation always signifies cause and effect relationship among variables but regression does
not”. Do you agree?
For 10 observations on price (P) and supply (S) the following data were obtained
ΣP= 130 , ΣS= 220, ΣP2=2288, ΣS2=5506 , ΣPS= 3467, N=10
Compute the two regression coefficients. Obtain the line of regression of S on P and estimate the
supply when the price is 16 units and find out the standard error of estimate.
Solution
st
1 part: Theoretical Question, discussed in the class
2nd part:
𝑵 ∑ 𝑺𝑷 − ( ∑ 𝑺)(∑ 𝑷)
𝒃𝒔𝒑 =
𝑵 ∑ 𝑷𝟐 − (∑ 𝑷)𝟐
𝟏𝟎(𝟑𝟒𝟔𝟕) − (𝟐𝟐𝟎)(𝟏𝟑𝟎)
𝒃𝒔𝒑 = = 𝟏. 𝟎𝟐
𝟏𝟎(𝟐𝟐𝟖𝟖) − (𝟏𝟑𝟎)𝟐
Similarly,
𝑵 ∑ 𝑺𝑷 − ( ∑ 𝑺)(∑ 𝑷)
𝒃𝒑𝒔 =
𝑵 ∑ 𝑺𝟐 − (∑ 𝑺)𝟐
𝟏𝟎(𝟑𝟒𝟔𝟕) − (𝟐𝟐𝟎)(𝟏𝟑𝟎)
𝒃𝒑𝒔 = = 𝟎. 𝟗𝟏
𝟏𝟎(𝟓𝟓𝟎𝟔) − (𝟐𝟐𝟎)𝟐
Regression line of S on P
𝑺−8 8)
𝑺 = 𝒃𝒔𝒑 (𝑷 − 𝑷
𝑺 − 𝟐𝟐 = 𝟏. 𝟎𝟐(𝑷 − 𝟏𝟑)
𝑺 = 𝟐𝟐 + 𝟏. 𝟎𝟐𝑷 − 𝟏𝟑. 𝟐𝟔
𝑺 = 𝟖. 𝟐𝟒 + 𝟏. 𝟎𝟐𝑷
When p = 16,
𝑺 = 𝟖. 𝟐𝟒 + 𝟏. 𝟎𝟐(𝟏𝟔) = 𝟐𝟓. 𝟎𝟔
• Standard error of the estimates ssp

𝑺𝒔𝒑 = 𝝈𝒔 ;𝟏 − 𝒓𝟐
𝒓𝟐 = 𝒃𝒔𝒑 𝒃𝒑𝒔 = 𝟏. 𝟎𝟐 × 𝟎. 𝟗𝟏 = 𝟎. 𝟗𝟑

𝒓 = √𝟎. 𝟗𝟑 = 𝟎. 𝟗𝟔

𝟐
∑𝑺 8𝟐
𝝈𝒔 = ? −𝑺
𝒏
;𝟓𝟓𝟎. 𝟔 − (𝟐𝟐)𝟐 = 𝟖. 𝟏𝟔
𝑺𝒔𝒑 = 𝟖. 𝟏𝟔;𝟏 − (. 𝟗𝟔)𝟐 = 𝟐. 𝟐𝟗

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 Q2. Given the following information:

r=0.8 , Σxy=60, 𝜎B =2.5 and Σx2 =90

where x and y are the deviations from the respective means , find the number of pairs.
ANS: 25
Q3. The total of the product of deviations of X and Y=3044. Number of pairs of observations=10.
Total of deviations of X= -170. Total of deviations of Y=-20. Total of squares of deviations of X=
8288. Total of the squares of deviations of Y= 2264. Find out the coefficient of correlation when the
arbitrary means of X and Y are 82 and 68 respectively.
ANS: since nothing is mentioned here, of course deviations are calculated from assumed
mean of 82 and 68 respectively.
𝒏 ∑ 𝑼𝑽 − ∑ 𝑼 ∑ 𝑽
𝒓=
;𝒏 ∑ 𝑼𝟐 − (∑ 𝑼)𝟐 ;𝒏 ∑ 𝑽𝟐 − (∑ 𝑽)𝟐
𝑼 = 𝑿 − 𝟖𝟐 𝒂𝒏𝒅 𝑽 = 𝒀 − 𝟔𝟖
0.78 is the answer for this question
Q4- Define correlation. Also distinguish between positive and negative correlation.
Theoretical question, discussed in the class.
Q5. Find the correlation coefficient between age and playing habits of the following students:
Age (yrs): 15 16 17 18 19 20
No.of students: 250 200 150 120 100 80
Regularplayers 200 150 90 48 30 12
Also calculate the probable error and the point out whether coefficient of correlation is significant.
Ans: firstly, you have to convert the regular player into percentage, that will be your y variable
and X variable is the age. Anyway, the answers are as follows; r = -.99, and it is not significant.
Q6- State the properties of regression coefficients.
Theoretical question, discussed in the class.
Q7. Calculate:-
1. Two regression coefficients.
2. Coefficient of correlation and
3. The two regression equations,
From the following information:
N= 10, ΣX= 350, ΣY=310, Σ(X-35)2= 162, Σ(Y-31)2= 222, Σ(X-35)(Y-31)= 92.
Ans:
(i) 0.57 and 0.42
(ii) 0.49

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(iii) Y = 11.05+0.57X and X = 21.98+0.42Y
Q8- Distinguish between correlation and regression.
Theoretical question, discussed in the class.
Q9. A computer, while calculating the correlation coefficient between two variables X and Y ,
obtained the following constants:
N=30 , ΣX= 120, ΣX2= 600, ΣY= 96, ΣY2=250, ΣXY=335
And it was discovered that two pairs which were copied as (8,10) and (12,7) were wrong. While the
correct pair were (8,12) and (10,8).
Obtain the correct correlation coefficient.
Ans: -0.431
Q10.. Given that the variance of x is 9 and the regression equations are 8x-10y+66=0 and 40x-
18y=214. Find:
1. mean values of x and y
2. coefficient of correlation between x and y
3. standard deviation of y.
Ans:
(i) -13.475, -4.18
(ii) 0.6
(iii) 4
Q11. A departmental store given in-service training to its salesmen, which is followed by a test. The
management is considering whether it should terminate the services of the salesman who did not do
well in the test . The following test gives the test scores and the sales made by the salesman:
Test Scores 14 Sales( in RS. ‘000) 31
19 36
24 48
21 37
26 50
22 45
15 33
20 41
19 39
Calculate the correlation between test scores and the sales. Does it indicate that the termination of
services for the low test score is justified? If the firm wants a minimum sales value of Rs. 30,000 from
each salesman , what is the minimum test score that will ensure the termination of service? Also
estimate the value of sales for a salesman having a test score if 28.

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Ans:
(i) 0.947
(ii) Yes
(iii) The minimum test score is 14
(iv) Y = 52.86
Q12. Calculate spearman’s rank correlation coefficient from the following data:
Rank 10 4 2 5 8 5 6 9
of X
Rank 10 6 2 5 8 4 5 9
of Y
Ans: 8.27