Question

Calculate coefficient of correlation between demand for a good and its price.

Answer 1

`gamma=(NSigmaXY-(SigmaX)(SigmaY))/(sqrt(NSigmaX^(2)-(SigmaX)^(2))sqrt(NSigmaY^(2)-(SigmaY)^(2)))`
`=((5xx575)-(140xx16))/(sqrt((5xx5050)-(140)^(2))sqrt((5xx66)-(16)^(2)))`
`=(2875-2240)/(sqrt((25250-19600))sqrt((330-256)))`
`=(635)/(sqrt(5650)xxsqrt(74))=(635)/(sqrt(5650xx74))=(635)/(sqrt(418100))=(635)/(646.6)=+0.98`