What Is the Correlation Coefficient and What Does It Assess

question 466

Short Answer

What is the correlation coefficient and what does it assess? In your answer, be sure to address the following points: 1) the range of possible values the correlation coefficient can have, 2) the difference between a positive and negative correlation, and 3) the difference between the strength and direction of the correlation coefficient.

---

Definitions:

Supply Curve

A visual chart that illustrates how the quantity of a product or service provided correlates with its price over a specific time frame.

Quantity Demanded

The aggregate quantity of a product or service that buyers are ready and capable of buying at a certain price during a defined time frame.

Demand

The willingness and financial capacity of individuals to buy goods and services at certain price levels.

Equilibrium Price

The price at which the quantity of a good or service demanded by consumers equals the quantity supplied by producers, resulting in a stable market condition.