Question

Big Rock Insurance Company did a study of per capita income and volume of insurance sales in eight Midwest cities. The volume of sales in each city was ranked, with 1 being the largest volume. The per capita income was rounded to the nearest thousand dollars.

Reading	1	2	3	4	5	6	7	8
Rank of insurance sales volume	1	8	4	3	5	7	2	6
Per capita income in $1000	18	15	19	16	14	12	17	13

Using a 0.01 level of significance, test the claim that there is a monotone relation (either way) between rank of sales volume and rank of per capita income.

(a) Using a rank of 1 for the highest per capita income, make a table of ranks to be used for a Spearman rank correlation test.

City

Rank of insurance sales volume x

Rank of per capita income in $1000 y

d = x - y

d2

1

2

3

4

5

6

7

8

b) compute the sample test statistic

Answer 1