Bhimani, Horngren,
Datar and Rajan,
Management and Cost Accounting, 5
th
Edition, Instructor’s Manual
© Pearson Education Limited 2012
9.4 No. High correlation merely indicates that the two variables move together in the data examined. It is essential also to consider economic plausibility before making inferences about cause and effect. Without any economic
plausibility fora relationship, it is less likely that a high level of correlation observed in one set of data will be similarly found in other sets of data.
Share with your friends: