Question

Let x be the average number of employees in a group health insurance plan, and let y be the

average administrative cost as a percentage of claims.

x

3

7

15

36

70

y

40

35

30

27

16

(a) Make a scatter diagram of the data and visualize the line you think best fits the data.

(b) Would you say the correlation is low, moderate, or strong? positive or negative?

strong and positive moderate and negative    moderate and positive low and positive strong and negative low and negative

(c) Use a calculator to verify that Σx = 131, Σx² = 6479, Σy = 148, Σy² = 4710, and Σxy = 2907. Compute r. (Round your answer to three decimal places.)

r =

As x increases, does the value of r imply that y should tend to increase or decrease? Explain.

Given our value of r, y should tend to increase as x increases. Given our value of r, y should tend to decrease as x increases.    Given our value of r, we cannot draw any conclusions for the behavior of y as x increases. Given our value of r, y should tend to remain constant as x increases. 

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