If There Is a Very Strong Correlation Between Two Variables

question 48

Multiple Choice

If there is a very strong correlation between two variables then the coefficient of determination must be

• A)much larger than 1, if the correlation is positive
• B)much smaller than -1, if the correlation is negative
• C)any value larger than 1
• D)None of these alternatives is correct.

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Definitions:

Fixed Cost

Costs that do not vary with the level of output or production in the short term, such as rent, salaries, and insurance premiums.

Lawn-mowing

The process of cutting grass to a uniform length, typically performed as a maintenance activity for aesthetic and health reasons in gardens and lawns.

Variable Costs

Expenditures that change in direct correlation with the amount of output or production.

Profit-maximizing Output

The level of production at which a firm can achieve the highest possible profit, given its cost structure and the price of its products or services.