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Question 29 of 38
Q.

(a) Calculate the Karl Pearson's coefficient of correlation for the following data and explain.

Price x1012141519
Supply y4041486050

OR

(b) Explain the importance of National Income.

Tamil Nadu DgeTamil Nadu HSC (DGE) Commerce Board 2024Subjective· 5mImportance★★★★★
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(a) Using deviations from the means, r = 68 / sqrt(46 × 260.8) ≈ +0.62 — a fairly high positive correlation between price and supply. (b) National income is important because it measures economic performance, allows time and cross-country comparison, guides planning and policy, and indicates living standards.

(a) Karl Pearson's coefficient of correlation

Given data: x (Price) = 10, 12, 14, 15, 19 ; y (Supply) = 40, 41, 48, 60, 50 ; n = 5.

Step 1 — Means:

Mean of x = (10 + 12 + 14 + 15 + 19) / 5 = 70 / 5 = 14.

Mean of y = (40 + 41 + 48 + 60 + 50) / 5 = 239 / 5 = 47.8.

Step 2 — Deviations from the means (dx = x − 14, dy = y − 47.8) and their products:

xydxdydx·dydx²dy²
1040−4−7.831.21660.84
1241−2−6.813.6446.24
144800.20.000.04
1560112.212.21148.84
195052.211.0254.84
Total68.046260.8

Step 3 — Apply the formula:

r = Σ(dx·dy) / sqrt( Σdx² × Σdy² )

r = 68 / sqrt( 46 × 260.8 )

r = 68 / sqrt( 11996.8 )

r = 68 / 109.53

r ≈ +0.62.

Interpretation: r ≈ +0.62 is a fairly high positive correlation. As price (x) increases, supply (y) also tends to increase — which agrees with the law of supply.

(b) Importance of National Income

In the Tamil Nadu HSC Economics syllabus, national income estimates are important because:

  • Measure of economic performance: National income shows the total output and the overall performance and growth of the economy over a period.
  • Basis for comparison: It allows comparison of economic progress over different years and between different countries. …

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