Question

Step by step please.
11 In the table below, P denotes average property prices and S average property sizes in six cities in 2012. Count New Y ork Madrid Rome London Paris Tokyo 10.2 7.2 9.0 11.6 10.8 17.2 6.7 5.5 5.8 7.7 7.1 a- Determine whether the data is a time series, a cross sectional data or panel data b- Dra a scatter plot with the data of the table. Intepret your graph c- Eind the correlation coefficient (P, S) and interpret your result. d- Eind a new correlation coefficient eliminating the Tokyo observation and interpret your result.

Answer 1

8)

a)

The given data is cross sectional data.

b)

Scatterplot of E v/s P 12 10

From the scatterplot (if we ignore the last observation), we can conclude negative correlation between the two variables.

c)

Hence, r = 0.73

The magnitude of the correlation coefficient suggests moderately strong positive correlation between the two variables ie as one variable increases the other also increases and vice versa.

d)

After excluding the Japanese observation,

r = -0.49.

Now, the magnitude of the correlation coefficient suggests negative correlation between the two variables ie as one variable increases the other decreases and vice versa.

11)

a)

The given data is cross sectional data.

b)

Scatterpot of P V/s S 35 漠) 25 20 15 10 10 12 14 16 20

From the scatterplot, we can conclude positive correlation between the two variables.

c)

r = 0.925

The magnitude of the correlation coefficient suggests very strong positive correlation between the two variables ie as one variable increases the other also increases and vice versa.

d)

After excluding the Tokyo observation,

r = 0.96

The magnitude of the correlation coefficient suggests very strong positive correlation between the two variables ie as one variable increases the other also increases and vice versa.

There is no change in the direction of correlation after excluding the Tokyo observation.

PS: We are only allowed to answer 4 parts per question.