How Does the Outlier Affect the Correlation Coefficient

question 49

Multiple Choice

How does the outlier affect the correlation coefficient?.

• A)The outlier has no effect on the correlation coefficient.
• B)The outlier reduces the correlation coefficient.
• C)The outlier increases the correlation coefficient.
• D)None of the above

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Definitions:

Physical Capital

Tangible assets such as buildings, machinery, and equipment used in the production of goods and services.

Variable Cost

Costs that vary directly with the level of production, such as raw materials, labor, and energy used in the manufacturing process.

Long Run

A period in economics during which all factors of production and costs are variable, allowing for the full adjustment to changes.

Fixed Cost

Expenses that do not change with the level of output production, such as rent, salaries, or equipment leases.