The Correlation Between Two Variables Is 0

question 74

Multiple Choice

The correlation between two variables is 0.29 for a sample of 12 observations. Based on a null hypothesis of no correlation versus an alternative hypothesis of positive correlation, what conclusion may be drawn at the .05 level of significance?

• A) Reject H0. There is evidence of positive correlation between the variables.
• B) Do not reject H0. We do not have evidence of positive correlation.
• C) Reject H0. We have evidence of negative correlation.
• D) None of the above.

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Definitions:

Scale

The size or level of activity of a company or operation, or the capacity to adjust the size or level of activity.

Increasing Returns

A condition in economics when an increase in the scale of production leads to a greater proportional increase in output.

Isoquants

Curves that represent combinations of inputs that produce the same level of output, used in production theory.

Output

Output refers to the quantity of goods or services produced by a firm, industry, or economy within a certain period.