The correlations table below indicates that: Correlations
$$\begin{array} { | l | l | r | r | }
\hline & & { \text { Sales } } & \begin{array} { r }
\text { Advertising } \
\text { expenditure }
\end{array} \
\hline \text { Sales } & \text { Pearson correlation } & 1 & 0.753 \left( { } ^ { * * } \right) \
\hline & \text { Sig. (two-tailed) } & & 0.005 \
\hline & N & 100 & 100 \
\hline \begin{array} { l }
\text { Adverting } \
\text { expenditure }
\end{array} & \text { Pearson correlation } & 0.753 \left( { } ^ { * * } \right) & 1 \
\hline & \text { Sig. (two-tailed) } & 0.000 & \
\hline & N & 100 & 100 \
\hline
\end{array}$$ ** Correlation is significant at the 0.01 level (two-tailed).
A) about 75 per cent of variance in sales can be explained by the variance in advertising expenditure.
B) about 57 per cent of the variance in advertising expenditure can be explained by the variance in sales.
C) about 57 per cent of the variance in sales can be explained by the variance in advertising expenditure.
D) about 75 per cent of the variance in advertising expenditure can be explained by the variance in sales.

Question

The correlations table below indicates that: Correlations
$$\begin{array} { | l | l | r | r | } 
\hline & & { \text { Sales } } & \begin{array} { r } 
\text { Advertising } \
\text { expenditure }
\end{array} \
\hline \text { Sales } & \text { Pearson correlation } & 1 & 0.753 \left( { } ^ { * * } \right) \
\hline & \text { Sig. (two-tailed) } & & 0.005 \
\hline & N & 100 & 100 \
\hline \begin{array} { l } 
\text { Adverting } \
\text { expenditure }
\end{array} & \text { Pearson correlation } & 0.753 \left( { } ^ { * * } \right) & 1 \
\hline & \text { Sig. (two-tailed) } & 0.000 & \
\hline & N & 100 & 100 \
\hline
\end{array}$$ ** Correlation is significant at the 0.01 level (two-tailed).
A) about 75 per cent of variance in sales can be explained by the variance in advertising expenditure.
B) about 57 per cent of the variance in advertising expenditure can be explained by the variance in sales.
C) about 57 per cent of the variance in sales can be explained by the variance in advertising expenditure.
D) about 75 per cent of the variance in advertising expenditure can be explained by the variance in sales.

Quizplus · Accepted Answer

The correlation coefficient shows a strong positive relationship between advertising expenditure and sales (r = 0.75). Since correlation does not imply causation, it would be incorrect to say that one variable is causing the other. However, we can infer that about 57 per cent of the variance in sales can be explained by the variance in advertising expenditure.

The Correlations Table Below Indicates That: Correlations ** Correlation Is Significant at the 0