Which of the Following Statements Is the Leastaccurate Concerning Correlation

question 104

Multiple Choice

Which of the following statements is the leastaccurate 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:

Substitutes

Goods or services that can be used in place of each other, where an increase in the price of one leads to an increase in demand for the other.

Imposes a Quota

A restriction, set by a government, on the maximum number of units of a particular product that can be imported or exported within a given period.

Equilibrium

A market condition where the quantity demanded by consumers equals the quantity supplied by producers, leading to a stable price.

Quota Rent

The earned income by holders of a production or import quota, representing the difference between domestic and world prices of a good.