Question

Calculate the coefficient of correlation between price of a good and its demand by direct method.

Answer 1

`gamma=(NSigmaXY-(SigmaX)(SigmaY))/(sqrt(NSigmaX^(2)-(SigmaX)^(2))sqrt(NSigmaY^(2)-(SigmaY)^(2)))`
`gamma=((7xx517)-(28xx177))/(sqrt((7xx140)-(28)^(2))sqrt((7xx5869)-(177)^(2)))`
`gamma=(3619-4956)/(sqrt((980-784))sqrt(41083-31329))`
`gamma=(-1337)/(sqrt(196)xxsqrt(9754))=(-1337)/(sqrt(196xx9754))`
`=(-1337)/(sqrt(1911784))=(-1337)/(1382.67)=-0.97.`