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B. Data analysis and statistical techniquesSyllabus Area BCorrelation

ACCA · Question 08 · B. Data analysis and statistical techniques

An e-commerce platform analyzes the relationship between the delivery time (in days) and the customer satisfaction score (out of 100). The calculated correlation coefficient (r) is -0.88.

Which of the following is the most accurate interpretation of this result?

Answer options:

A.

There is a weak negative linear relationship; delivery time has little impact on customer satisfaction.

B.

There is a strong positive linear relationship; longer delivery times lead to higher satisfaction.

C.

There is a strong negative linear relationship; as delivery time increases, customer satisfaction tends to decrease significantly.

D.

Delivery time causes 88% of the decrease in customer satisfaction.

How to approach this question

Evaluate the sign (negative means inverse relationship) and the magnitude (0.88 is close to 1.0, meaning strong). Remember correlation is not causation.

Full Answer

C.There is a strong negative linear relationship; as delivery time increases, customer satisfaction tends to decrease significantly.✓ Correct
The correlation coefficient (r) ranges from -1 to +1. A value of -0.88 indicates a strong negative linear relationship, meaning that as one variable (delivery time) goes up, the other (satisfaction) goes down. It does not prove causation.

Common mistakes

Assuming correlation implies causation (Option D), or confusing the coefficient of correlation (r) with the coefficient of determination (r-squared).
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