Question

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	35	70
y	40	35	30	26	20

(a) Make a scatter diagram of the data and visualize the line you think best fits the data.

(b) Would you say the correlation is low, moderate, or strong? positive or negative?

low and negative

low and positive    

moderate and negative

strong and negative

moderate and positive

strong and positive

(c) Use a calculator to verify that Σx = 130, Σx² = 6408, Σy = 151, Σy² = 4801, and Σxy = 3125. Compute r. (Round your answer to three decimal places.)
r =

As x increases, does the value of r imply that y should tend to increase or decrease? Explain.

Given our value of r, y should tend to increase as x increases.

Given our value of r, y should tend to decrease as x increases.  

   Given our value of r, we cannot draw any conclusions for the behavior of y as x increases.

Given our value of r, y should tend to remain constant as x increases.

Answer 1

	X	Y	X * Y
	3	40	120	9	1600
	7	35	245	49	1225
	15	30	450	225	900
	35	26	910	1225	676
	70	20	1400	4900	400
Total	130	151	3125	6408	4801

Part b)

strong and negative

Part c)

r = -0.938

Given our value of r, y should tend to decrease as x increases.