A random sample of 25 Real Estate listings for houses in the Northeast section o

Question

A random sample of 25 Real Estate listings for houses in the Northeast section of a large city was selected from the city newspaper. A correlation coefficient of -.80 was found between the age of a house and its list price. Which of the following statements is the best interpretation of this correlation? A. Older houses tend to cost more money than newer houses. B. Newer houses tend to cost C. Older houses are worth more because they were built with higher quality materials and labor. D. New houses cost more because supplies and labor are more expensive today. more money than older houses.

Explanation / Answer

A negative correlation means inverse relationship between the 2 variables, that means that as the value of one variable increases, the value of the other variable decreases and as the value of the first variable decreases, then the value of the second variable increases.

Therefore as the age of the house increases and it becomes older, then the list price should decrease. Therefore older houses tends to be less costly than the newer ones.

Therefore b is the correct answer here.

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