ACTIVITY 3 IN STATISTICS

CORRELATION, SIMPLE LINEAR REGRESSION AND NORMAL

DISTRIBUTION

PROBLEM SOLVING
Answer the following problems neatly and orderly. Express the final
correlation coefficient up to three decimal places. Do not copy from your
seatmates otherwise, corresponding deduction will be taken from your
total score. (BE HONEST AT ALL TIMES)

1. A study was made on the amount of converted sugar in a certain process

at various temperatures. The data were coded and recorded as follows
Temperature, x Converted Sugar, y
1.0 8.1
1.1 7.8
1.2 8.5
1.3 9.8
1.4 9.5
1.5 8.9
1.6 8.6
1.7 10.2

a. Estimate the linear regression line

b. Estimate the amount of converted sugar produced when the coded
temperature is 1.75.
c. Compute for the rho-coefficient
2. A study was made by a retail merchant to determine the relation between
weekly advertising expenditures and sales. The following data were
recorded.

Advertising Costs Sales (P)

(P)
40 385
20 400
25 395
20 365
30 475
50 440
40 490
20 420
50 560
40 525
25 480
50 510

a. Plot a scatter diagram

b. Estimate the weekly sales when the advertising costs is P35.00
c. Compute for the pearson r-coefficient
 3. The marketing manager of a large supermarket chain would like to
use shelf space to predict the sales of pet food. A random sample of 12
equal-sized stores PETFOOD is selected, with the following results:
Store Shelf space (X) in feet Weekly sales (Y) in
hundreds of pesos
1 5 1.6
2 5 2.2
3 5 1.4
4 10 1.9
5 10 2.4
6 10 2.6
7 15 2.3
8 15 2.7
9 15 2.8
10 20 2.6
11 20 2.9
12 20 3.1

a. Construct a scatter diagram

b. Use the least square method to find the regression coefficients a and b
(y=a+bx).
c. Interpret the meaning of the slope b in this problem.
d. Predict the weekly sales (in hundreds of pesos) of pet food for stores
with 8 feet of shelf space for pet food.
 4. The following data represent the value of exports and imports in from
year 2001-2010 in the Philippines for various countries:
Year Exports Imports
2001 874.1 912.8
2002 730.8 1180.2
2003 403.5 349.1
2004 266.2 243.6
2005 259.9 227.2
2006 191.1 202.0
2007 158.5 176.20
2008 150.4 141.1
2009 122.5 107.3
2010 121.8 116.0
a. Compute the regression equation
b. Compute for r and ρ
c. What conclusion can you reach about the relationship between exports
and imports.

1. Family Income – includes primary income and receipts from other sources
received by all family members during the calendar year, as participants in
 any economic activity or as recipients of transfers, pensions, grants, etc.
(2000 FIES, NSO)

Primary income includes:

 Salaries and wages from employment

 Commissions, tips, bonuses, family and clothing allowance, transportation
and representation allowance and honoraria
 Other forms of compensation and net receipts derived from the operation
of family-operated enterprises/activities and the practice of a profession or
trade
 Family Expenditures – refer to the expenses or disbursements made by
the family purely for personal consumption during the calendar year.  They
exclude all expenses in relation to farm or business operations, investment
ventures, purchase of real property and other disbursements, which do not
involve personal consumption. 

 Gifts, support, assistance or relief in goods and services received by the

family from friends, relatives and imputed rent of owner-occupied dwelling
unit are included.  Value consumed from net share of crops, fruits and
vegetables produced or livestock raised by other households, family
sustenance and entrepreneurial activities are also included.  (2000 FIES,
NSO

Average Annual Family Income and Expenditure by Region

1988 to 2003
(in PhP000)

  2003
Average  Average
Region
Income Expenditure
Philippines 148 124
NCR 266 218
CAR 152 126
Ilocos 124 102
Cagayan Valley 126    99
Central Luzon 160 138
Calabarzon 184 158
Mimaropa 103    84
Bicol 109    94
Western Visayas 111    98
Central Visayas 121 102
Eastern Visayas 103    84
Zamboanga
   93    75
Peninsula 1/
Northern 109    91
 Mindanao
Davao 117 100
Soccsksargen 2/ 113    85
Caraga    90    78
ARMM 3/ 83 67
Source: PSA
a. Compute for the correlation coefficient r between average income and
expenditure. (5 points)
b. Express the equation of a line that describes average expenditure of
families in terms of their average income. (5points)
c. What will be the average expenditure of a family with average income of
Php100,000? (5points)

1. Correlation and Regression Analysis

a. find the line of best fit for predicting the prime lending rate (y) from the inflation
rate (x). 
 
 Inflation rate Prime lending rate
3.3 5.2
5.8 6.8
6.2 8
6.5 6.9
7.6 9
9.1 7.9
11 10.8

b. find the line of best fit for predicting the prime lending rate (y) from the inflation
rate (x). 
 

City Education Crime

Batangas 30 25
Lipa 31 16
Tanauan 32 20
Los Banos 35 12
Lucena 35 10
Calamba 36 13
San Pablo 38 18

c. A statistics instructor at a large western university would like to examine the

relationship(if any) between the number of optional homework problems students
do during the semester and their final course grade. She randomly selects 12
students for study and asks them to keep track of the number of these problems
completed during the course of the semester. At the end of the class each
student’s total score is recorded along with their final grade. The data follow in
table below

Problems Course Grade

51 61
58 68
62 66
65 67
68 72
68 73
76 73
77 72
78 78
78 73
84 76
85 75
91 75

a. Identify the strength of the correlation

b. Test the hypothesis for a significant linear correlation
 c. Use regression equation to predict a students final course grade if 75
optional homework assignments are done
d. Use the regression equation to compute the number of optional homework
assignments that need to be completed if a student expects an 85

5.
With the growth of internet service providers, a researcher decides to examine whether there is a
correlation between cost of internet service per month (rounded to the nearest dollar) and degree
of customer satisfaction (on a scale of 1 - 10 with a 1 being not at all satisfied and a 10 being
extremely satisfied). The researcher only includes programs with comparable types of services.
A sample of the data is provided below.
 dollars satisfaction
11 6
18 8
17 10
15 4
9 9
5 6
12 3
19 5
22 2
25 10
1. Compute the correlation coefficient.
2. What does this statistic mean concerning the relationship between amount
of money spent per month on internet provider service and level of
customer satisfaction?
3. What percent of the variability is accounted for by the relationship between
the two variables and what does this statistic mean?

1. Policymakers are divided as to whether government expansion helps or

hinders economic growth. Advocates of bigger government argue that
government programs provide valuable "public goods" such as education
and infrastructure. They also claim that increases in government spending
can bolster economic growth by putting money into people's pockets.
Proponents of smaller government have the opposite view. They explain
that government is too big and that higher spending undermines economic
growth by transferring additional resources from the productive sector of
the economy to government, which uses them less efficiently. They also
warn that an expanding public sector complicates efforts to implement pro-
growth policies-such as fundamental tax reform and personal retirement
accounts- because critics can use the existence of budget deficits as a
reason to oppose policies that would strengthen the economy.
Which side is right?
Year Philippines GDP Philippines Government
Annual Growth Rate Spending (in billions)
2000 6.5 12
2001 3.9 14
2002 3.7 12
2003 4.6 11
2004 2.8 13
2005 1.6 15
2006 1.4 14
2007 8.4 13
2008 8.9 16
2009 7.3 18
2010 6.1 12

a. Calculate the correlation coefficient r and spearman rho

b. Determine the least squares line (y=ax+b)
 c. What do statistics calculated above tell you on the relationship between
the annual growth rate and government spending in the case of the
Philippines? Which side is right?

2. Definition: The average annual percent change in the population, resulting

from a surplus (or deficit) of births over deaths and the balance of migrants
entering and leaving a country. The rate may be positive or negative. The growth
rate is a factor in determining how great a burden would be imposed on a country
by the changing needs of its people for infrastructure (e.g., schools, hospitals,
housing, roads), resources (e.g., food, water, electricity), and jobs. Rapid
population growth can be seen as threatening by neighboring countries.

http://www.indexmundi.com/philippines/population_growth_rate.html#sthash.ENIsbsIW.dpuf
200 200 200 200 200 200 200 200 200 200 201 201 201
Country
0 1 2 3 4 5 6 7 8 9 0 1 2
Philippine
2.07 2.03 1.99 1.92 1.88 1.84 1.8 1.76 1.99 1.96 1.93 1.9 1.87
s

Definition of Birth rate: This entry gives the average annual number of births
during a year per 1,000 persons in the population at midyear; also known as
crude birth rate. The birth rate is usually the dominant factor in determining the
rate of population growth. It depends on both the level of fertility and the age
structure of the population.
200 200 200 200 200 200 200 200 200 200 201 201 201
Country
0 1 2 3 4 5 6 7 8 9 0 1 2
Philippin 27.8 27.3 26.8 26. 25. 25.3 24.8 24.4 26.4 26.0 25.6 25.3 24.9
es 5 7 8 3 8 1 9 8 2 1 8 4 8

Inflation is when the prices of most goods and services continue to creep
upward. When this happens, your standard of living falls. That's because each
peso buys less, so you have to spend more to get the same goods and services.

199 200 200 200 200 200 200 200 200 200 200 201 201
Country
9 0 1 2 3 4 5 6 7 8 9 0 1
Philippine
6.8 5 6 3.1 3.1 5.5 7.6 6.2 2.8 9.3 3.2 3.8 4.8
s

a. Compute the correlation coefficient rho between the population growth and
birth rate , population growth and inflation in the Philippines (covering the
year 2000 to 2011)
b. Estimate the population growth given the birth rate is 30 and inflation rate
is 6.

Part III Normal distribution

1. In a study of employee stock ownership plans, satisfaction by
employees is measured and found to be normally distributed with a
mean of 4.89 and a standard deviation of 0.63.
a. If employees in the bottom 8% are to be given interviews find the
score separating those who will receive interviews from those who
will not.
b. What percentage of employees has satisfaction that is above 5.10?
c. What percentage of employees has satisfaction that is between 4.85
4.92?
 d. What percentage of employees has satisfaction that is lower than
4.95?
e. What are the two satisfaction scores which 80% of the employees
fall?
2. On one measure of attractiveness, scores are normally distributed with
a mean of 3.93 and a standard deviation of 0.75 (based on “Physically
Attractiveness and Self-Perception of Mental Disorder,” by Burns and
Farina, Journal of Abnormal Psychology, Vol. 96, N0.2).
a. Find the probability of randomly selecting a subject with a measure
of attractiveness that is greater than 2.75.
b. If the subjects in the upper 20% are to be described as the most
attractive find the score separating those who will be categorized as
lesser attractive?
c. What percentage of the subjects has scores of attractiveness
between 3.95 to 4.01?
d. What percentage of the subjects has attractiveness scores that is
lower than 3.80?
e. Between what attractiveness scores were 90% of subjects included?

3. For a normal distribution with a mean of 100 and a standard deviation of 20

find each value requested.
1. What score separates the top 40% from the bottom 60% of the
distribution?
2. What is the minimum score needed to be in the top 5% of this
distribution?
3. What scores form the boundaries for the middle 60% of this
distribution?
4. For a normal distribution with μ= 80 and σ = 12,
1. What is the probability of randomly selecting a score greater than 83?
2. What is the probability of selecting a score greater than 74?
3. What is the probability of selecting a score less than 92?
4. What is the probability of randomly selecting a score less than 62?
5. What score separates the too 40% (highest scores) from the rest?

 Exactly –1. A perfect downhill (negative) linear relationship

 -0.51–0.70. A strong downhill (negative) linear relationship

 -0.31–0.50. A moderate downhill (negative) relationship

 -0.1 –0.30. A weak downhill (negative) linear relationship

 0. No linear relationship

 +0.30. A weak uphill (positive) linear relationship

 +0.50. A moderate uphill (positive) relationship

 +0.70. A strong uphill (positive) linear relationship

 Exactly +1. A perfect uphill (positive) linear relationship