The following data are based on information from Domestic Affairs. Let x be the average number of employees in a group health insurance plan, and let y be the average administrative cost as a percentage of claims.

(a) Make a scatter diagram and draw the line you think best fits the data.
(b) Would you say the correlation is low, moderate, or strong? positive or negative?
(c) Use a calculator to verify that ˆ‘x = 135, ˆ‘x2 = 7133, ˆ‘y = 148, ˆ‘y2 = 4674, and ˆ‘xy = 3040. Compute r. As x increases from 3 to 75, does the value of r imply that y should tend to increase or decrease? Explain.

Transcribed Image Text:

7 35 15 75 5 3 3 40 8