Use the Rank Correlation Coefficient to Test for a Correlation

question 64

Essay

Use the rank correlation coefficient to test for a correlation between the two variables?
Ten trucks were ranked according to their comfort levels and their prices. $$\begin{array} { c c c } \text { Make } & \text { Comfort } & \text { Price } \\\hline \text { A } & 1 & 6 \\\text { B } & 6 & 2 \\\text { C } & 2 & 3 \\\text { D } & 8 & 1 \\\text { E } & 4 & 4 \\\text { F } & 7 & 8 \\\text { G } & 9 & 10 \\\text { H } & 10 & 9 \\\text { I } & 3 & 5 \\\text { J } & 5 & 7\end{array}$$ Find the rank correlation coefficient and test the claim of correlation between comfort and
price. Use a significance level of 0.05.

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Definitions:

Price

Price refers to the amount of money expected, required, or given in payment for something, representing the value exchange between buyer and seller in a market.

Kinked Demand

A demand curve that has a distinct bend or "kink" at a certain price level, reflecting different elasticity above and below that price.

Marginal Cost

The increase in cost resulting from the production of an extra unit of a good or service.

Output Level

The total amount of goods or services produced by a business or economy during a specific period.