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a.
The given data tabulates evaluation on quality rating and meal price for 300 restaurants in
metropolitan area. It is required to develop a bivariate probability distribution for quality
and meal price of a randomly selected restaurant in the given city.
Divide value in each cell by the total number of restaurants. The bivariate empirical
discrete probability distribution is as follows:
1 2 3 Total
1 0.14 0.13 0.01 0.28
2 0.11 0.21 0.18 0.5
3 0.01 0.05 0.16 0.22
Total 0.26 0.39 0.35 1.00
Table 5a-27E probability distribution.
b.
= 0.4964
c.
= 0.6019
d.
The formula for computing covariance for random variables x and y is given as follows:
From information,
Substitute the values in equation (1) and obtain the required covariance. Therefore, the
covariance is as follows:
Therefore, the required answers is: 0.2854 . The positive sign of the value indicate that
variables x and y are positively related. In other words, there is positive relationship
between quality and meal price.
e.
xy
xy (2)
x y
Where, xy is the covariance of random variable x and y; x is standard deviation of x,
y is standard deviation of y.
Substitute the values in the equation (2) and obtain the required value.
xy
xy
x y
0.2854
=
0.4964 0.6019
= 0.5221
Therefore, the required answers is: 0.5221 . The value of correlation coefficient lies in
middle position from -1 to 1, which implies a moderate, positive relationship between the
variables. Therefore, it is not feasible to find a low cost, high quality restaurant in the
city, as with increasing cost, quality increases.