Important Questions: Correlation | Economics Class 11 - Commerce PDF Download

Q1: What is a simple correlation?
Ans: A simple correlation refers to the study of the relationship between only two variables. It assesses the degree and direction of the linear relationship between these two variables without considering the influence of additional variables.

Q2: When is the rank correlation method used?
Ans: The rank correlation method is used when dealing with qualitative variables, such as bravery, beauty, virtue, wisdom, etc. Instead of numerical values, this method relies on the ranks or orderings of the variables to assess their relationship.

Q3: Define the line of best fit.
Ans: The line of best fit is a straight line that passes through a scatter plot in such a way that it minimizes the overall distance between the line and the data points. It represents the most accurate approximation of the relationship between variables and is commonly used in regression analysis to make predictions based on the given data.

Q4: What is the difference between negative and positive correlations?
Ans: In a positive correlation, variables move in the same direction: when one variable increases, the other variable also increases. In contrast, a negative correlation indicates that variables move in opposite directions: when one variable increases, the other variable decreases.

Q5: What is a multiple correlation?
Ans: Multiple correlation occurs when the relationship between three or more variables is studied simultaneously. It aims to understand how a dependent variable is influenced by two or more independent variables, taking into account the combined effects of these variables on the outcome. Multiple correlation is a more complex analysis that considers the interactions between multiple factors.

Q6: Define correlation.
Ans: Correlation is a statistical method used to measure the strength and direction of the relationship between two or more quantitative variables, such as demand and price. It quantifies how changes in one variable correspond to changes in another, providing insights into their mutual dependence and association.

Q7: The coefficient of correlation is between -1 and +1. Express it arithmetically.
Ans: The coefficient of correlation ranges from -1 to +1. A value of -1 signifies a perfect negative correlation, +1 represents a perfect positive correlation, and 0 indicates no correlation between the variables.

Q8: Define partial correlation.
Ans: Partial correlation refers to a statistical technique used when more than two variables are involved. It assesses the relationship between two variables while controlling for the influence of one or more additional variables. Essentially, it examines the correlation between two variables while holding the effects of other variables constant.

Q9: Explain the principal methods for calculating the coefficient of correlation.
Ans: The principal methods for calculating the coefficient of correlation include:

• Scatter diagram method: Graphically representing data points to visualize the correlation.
• Karl Pearson’s coefficient of correlation: Calculated using a formula to quantify the linear relationship between variables.
• Spearman’s rank correlation coefficient: Utilizing the ranks of values instead of their actual numerical values to assess correlation.

Q10: What is the nature of the correlation of two variables when they move in the same direction?
Ans: When two variables move in the same direction, the correlation is positive. This means that as one variable increases, the other variable also increases, indicating a positive linear relationship.