The Correlation Coefficient Tells Us

question 41

Multiple Choice

The correlation coefficient tells us

• A) the general shape of the scatterplot.
• B) which variable causes the other.
• C) how well we can predict the level of one variable from the level of the other.
• D) more than one of the above

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Definitions:

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in the price of that good.

Responsiveness of Quantity

The degree to which the quantity demanded or supplied responds to changes in price, income, or other factors.

Responsiveness of Price

The degree to which the demand or supply of a product changes in response to a change in price.

Consumer Surplus

The difference between what consumers are willing to pay for a good or service and what they actually pay, representing the extra satisfaction or utility gained.