Question

The tourism industry hires a marketing company to promote overseas vacations. The marketing companies research shows a +0.72 correlation between the number of overseas vacations booked and amount of free time, in days, people have each year. Therefore, the marketing company decides to develop an advertising campaign aimed specifically at people, who have lots of free time.

Which of the following is true about this decision?

a. The decision may not be a good one, since it is possible that there is a "lurking" variable, such as income, behind both the number of booked overseas vacations and the number of free days people have each year.
b. The decision is a good one, since we know that the number of free days people have cause them to book more vacations.
c. The decision is a good one, since there is a strong positive relationship between number of booked vacations and the number of free days people have each year.
d. The decision is may not be a good one, since there is a strong positive relationship between number of booked vacations and the number of free days people have each year.

Answer 1

A: The decision may not be a good one, since it is possible that there is a "lurking" variable, such as income, behind both the number of booked overseas vacations and the number of free days people have each year.

Explanation:

The correlation coefficient given alone is not sufficient to find out whether the relationship was linear or not. As such there may be a lurking variable and we may therefore have to see the scatter plot diagram to help us know if the relationship was a linear one or not.