Question

If the VIF is 2 then what is value of correlation coefficient (r^2)

Answer 1

Cost of  8 scores of bananas =  rs 192 1 score = 20 Therefore,  Cost of 1 banana  =  20*8                                = 160                                =192/160                                = rs.  1.2 Cost of 85 bananas = 85*1.2                                   = rs 102

Answer 2

Given that,

The value of VIF is 2.

To find,

The value of correlation coefficient i.e. $r^2$.

Solution,

The relation between the correlation coefficient and VIF is given by the formula as follows :

$\text{VIF}=\dfrac{1}{1-\text{r}^2}$

Put the value of VIF = 2

$2=\dfrac{1}{1-\text{r}^2}\\\\2(1-r^2)=1\\\\1-r^2=\dfrac{1}{2}\\\\r^2=\dfrac{1}{2}$

So, the value of $r^2$ is $1/2$.