Final answer:
The degree of association between cost and activity output is measured by the goodness of fit. The correlation coefficient indicates the strength of the association, and the coefficient of determination quantifies how much of the variation is explained by the independent variable.
Step-by-step explanation:
The degree of association between cost and activity output is measured by d. goodness of fit.
When assessing the relationship between two variables, such as cost and activity level, a statistic known as the correlation coefficient (r) is often used. This is a measure developed by Karl Pearson to give the strength of the association between the independent and dependent variables. The correlation coefficient itself is a value between -1 and +1, indicating the strength and direction of the linear relationship. A positive value suggests that the variables increase together, while a negative value indicates an inverse relationship.
Moreover, the coefficient of determination (r²) explains the percentage of variability in the dependent variable accounted for by the independent variable. When applied to a least-squares regression model, the goodness of fit can be assessed by how well the model's predictions match the actual data. In hypothesis testing, a chi-square test for goodness of fit determines if the observed distribution fits the expected distribution. If the correlation is significant, it suggests a strong association between the variables in question.