Question

Auction bids The author is a member of the board of directors of a nonprofit organization that held a fund-raising auction. He recorded the opening bids suggested by the auctioneer and the final winning bids for several items. The amounts are listed below. Is there sufficient evidence to conclude that there is a linear correlation between the opening bids suggested by the auctioneer and the final winning bids? Assume test statistic is t= 0.947. α = 0.01

Find Critical value and state your conclusion;  there is a linear correlation between the opening bids or NOT.?

Opening Bid	1500	500	500	300
Winning Bid	650	175	125	125

Group of answer choices

a) C.V. t= ± 0.99 Reject, there is no correlation

b) C.V. t= ± 0.878 Support the claim

c) C.V. t= ±0. 878 Reject the claim

d) C.V. t= ± 0.99 Support, there is a correlation

Answer 1

Answer---->> correct option is

a). C.V. t = $\pm$ 0.99 Reject, There is no correlation.

Given that Auction bids the author is member of board of director of non-profit organization that held a fundraising auction. He recorded the opening bids suggested by the auctioneer and final winning bids for several times. The amount are as follow

Opening bids 1500

Winning bids 650

We want to test is there linear correlation between the opening bids suggested by the auctioneer and the final winning bids.

claim:- There is a correlation between opening bids and winning bids.

Therefore, The null and alternative hypothesis is

H0 :- There is no correlation.

H1:- There is correlation.

Test statistic :- t = 0.947

Level of significance = $\alpha$ = 0.01

Critical value = $\pm$ 0.99

Decision rule :- Reject H0 if  |t| > + Critical value otherwise do not reject H0 .

Here , |t| = 0.947 < + critical value = 0.99

Therefore we accept H0 at 1 % level of significance.

Conclusion :- Reject the claim. Therefore there is no correlation .