A sample of 79 companies was taken and the annual profits (y) were plotted against annual sales (x). The plot is given below. All values in the plots are in units of $100,000. The correlation between sales and profits is found to be 0.814. Based on this information, we may conclude which of the following? options: 1. Not surprisingly, increasing sales causes an increase in profits. This is confirmed by the large positive correlation. 2. There are clearly influential observations present. 3. If we group the companies in the plot into those that are small in size, those that are medium in size, and those that are large in size and compute the correlation between sales and profits for each group of companies separately, the correlation in each group will be about 0.8. 4. All of the above.
A sample of 79 companies was taken and the annual profits (y) were plotted against annual sales (x). The plot is given below. All values in the plots are in units of $100,000.
The
options:
1. Not surprisingly, increasing sales causes an increase in profits. This is confirmed by the large
2. There are clearly influential observations present.
3. If we group the companies in the plot into those that are small in size, those that are medium in size, and those that are large in size and compute the correlation between sales and profits for each group of companies separately, the correlation in each group will be about 0.8.
4. All of the above.
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