Question

A scatter diagram is drawn by Avantika to assess the degree of correlation between

price and quantity demanded. On plotting the points, she observes that all the points lie

on the same downward sloping line and concludes that both the variables exhibit

perfect positive correlation. Is she correct? Give reasons for your answer.​

Answer 1

The scatter diagram graphs pairs of numerical data, with one variable on each axis, to look for a relationship between them. If the variables are correlated, the points will fall along a line or curve. The better the correlation, the tighter the points will hug the line.