Which of the Following Statements Is Least Accurate Concerning Correlation

question 114

Multiple Choice

Which of the following statements is least accurate concerning correlation analysis?

• A)Correlation does not imply causation.
• B)The correlation coefficient captures only a linear relationship.
• C)The correlation coefficient may not be a reliable measure when outliers are present in one or the both of the variables.
• D)The correlation coefficient describes both the direction and strength of the relationship between two variables only if the two variables have the same units of measurement.

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Definitions:

Perfect Complements

Goods that are often used together in fixed proportions, where the consumption of one item necessarily involves the consumption of the other.

Income Effect

The change in an individual's or economy's consumption patterns due to a change in real income, reflecting how increases or decreases in income can affect buying habits.

Substitution Effect

The alteration in purchasing behavior caused by variations in the relative costs of products, prompting buyers to opt for less expensive alternatives over pricier ones.

Price Change

An adjustment in the cost of a good or service in the market, which can be an increase or decrease due to various factors.