Applied Business Statistics
Exam Answer Key
Course Introduction
Applied Business Statistics focuses on the practical application of statistical techniques within a business context. The course covers essential topics such as data collection, descriptive statistics, probability distributions, sampling, hypothesis testing, regression analysis, and quality control. Emphasis is placed on interpreting data and making informed business decisions using statistical software and real-world business scenarios. Students develop critical analytical skills to solve business problems and improve organizational effectiveness by applying relevant statistical methods.
Recommended Textbook
Basic Business Statistics
12th Edition by Mark L. Berenson
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18 Chapters
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2
Chapter 1: Introduction
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Sample Questions
Q1) Referring to Table 1-2, the possible responses to the question "In which year do you think the last recession in the U.S. started?" result in
A) a nominal scale variable.
B) an ordinal scale variable.
C) an interval scale variable.
D) a ratio scale variable.
Answer: C
Q2) Referring to Table 1-1, the possible responses to the question "Are you happy, indifferent, or unhappy with the performance per dollar spent on the DVD player?" are values from a
A) discrete numerical random variable.
B) continuous numerical random variable.
C) categorical random variable.
D) parameter.
Answer: C
Q3) Most colleges admit students based on their achievements in a number of different areas. Whether a student has taken any advanced placement courses is an example of a ________ variable.
Answer: categorical
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Page 3
Chapter 2: Organizing and Visualizing Data
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Sample Questions
Q1) Referring to Table 2-12, if the sample is a good representation of the population, we can expect ________ percent of those for the plan in the population will be males.
Answer: 24%
Q2) Referring to Table 2-1, how many drivers are represented in the sample?
A) 5
B) 15
C) 18
D) 50
Answer: D
Q3) In a contingency table, the number of rows and columns
A) must always be the same.
B) must always be 2.
C) must add to 100%.
D) None of the above
Answer: D
Q4) Referring to Table 2-13, construct a percentage polygon for the detergent data if the corresponding frequency distribution uses "9.0 but less than 10.0" as the first class.
Answer: 11ea3099_b7fa_1235_a80d_17f16dd3d202_TB1604_00
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Page 4
Chapter 3: Numerical Descriptive Measures
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Sample Questions
Q1) A boxplot is a graphical representation of a five-number summary.
A)True
B)False
Answer: True
Q2) Referring to Table 3-3, construct a boxplot for the data in this sample.
Answer: 11ea3099_b7ff_1b5a_a80d_9ffd77db7810_TB1604_00
Q3) Referring to Table 3-6, construct a boxplot for the rate of return
Answer: 11ea3099_b7ff_b79d_a80d_0f4d8dba6f56_TB1604_00
Q4) According to the Chebyshev rule, at least 75% of all observations in any data set are contained within a distance of how many standard deviations around the mean?
A) 1
B) 2
C) 3
D) 4
Answer: B
Q5) The Z score of a value can never be negative.
A)True
B)False
Answer: False
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Chapter 4: Basic Probability
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Sample Questions
Q1) Referring to Table 4-1, given alcohol was involved, what proportion of accidents involved a single vehicle?
A) 50/75 or 66.67%
B) 50/170 or 29.41%
C) 120/170 or 70.59%
D) 120/400 or 30%
Q2) Referring to Table 4-4, suppose a randomly selected patron is a female. Then the probability the patron prefers water is ________.
Q3) A new model car from Ford Motor Company offers a keyless entry system that utilizes a four-letter code. How many different possible combinations are there for the code?
Q4) If two events are mutually exclusive and collectively exhaustive, what is the probability that one or the other occurs?
A) 0
B) 0.50
C) 1.00
D) Cannot be determined from the information given
Q5) Suppose A and B are events where P(A)= 0.4, P(B)= 0.5, and P(A and B)= 0.1. Then P(A or B)= ________.
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Chapter 5: Discrete Probability Distributions
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Sample Questions
Q1) Referring to Table 5-2, the probability that exactly 1 business succeeds is ________.
Q2) Referring to Table 5-8, if you decide to choose Design A for half of the production lines and Design B for the other half, what is the risk of your investment?
Q3) Referring to Table 5-2, the probability that all 3 businesses succeed is ________.
Q4) Referring to Table 5-7, if you can invest 70% of your money on the house in neighborhood A and the remaining on the house in neighborhood B, what is the portfolio risk of your investment?
Q5) Referring to Table 5-7, what is the total variance of value gain if you invest in both houses?
Q6) The local police department must write, on average, 5 tickets a day to keep department revenues at budgeted levels. Suppose the number of tickets written per day follows a Poisson distribution with a mean of 6.4 tickets per day. Find the probability that exactly 6 tickets are written on a randomly selected day from this population.
Q7) In a Poisson distribution, the mean and variance are equal. A)True B)False
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Page 7
Chapter 6: The Normal Distribution and Other Continuous
Distributions
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Sample Questions
Q1) A food processor packages orange juice in small jars. The weights of the filled jars are approximately normally distributed with a mean of 10.5 ounces and a standard deviation of 0.3 ounce. Find the proportion of all jars packaged by this process that have weights that fall below 10.875 ounces.
Q2) You were told that the mean score on a statistics exam is 75 with the scores normally distributed. In addition, you know the probability of a score between 55 and 60 is 4.41% and that the probability of a score greater than 90 is 6.68%. The middle 86.64% of the students will score between which two scores?
Q3) A normal probability plot may be used to assess the assumption of normality for a particular set of data.
A)True
B)False
Q4) The interval between patients arriving at an outpatient clinic follows an exponential distribution at a rate of 1.5 patients per hour. What is the probability that a randomly chosen arrival to be less than 10 minutes?
Q5) Referring to Table 6-6, find the probability that the annual return of a random year will be less than 7.5%.
Page 8
Q6) Referring to Table 6-3, what is the variance of the time interval?
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Chapter 7: Sampling and Sampling Distributions
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Sample Questions
Q1) At a computer manufacturing company, the actual size of computer chips is normally distributed with a mean of 1 centimeter and a standard deviation of 0.1 centimeter. A random sample of 12 computer chips is taken. What is the probability that the sample mean will be below 0.95 centimeters?
Q2) Referring to Table 7-4, what is the probability that the sample mean lifetime is more than 1,550 hours?
Q3) If you randomly select a student from the first row of a business statistics class and then every other fifth student thereafter until you get a sample of 20 students, this is an example of a convenience sample.
A)True
B)False
Q4) Which of the following is true about the sampling distribution of the sample mean?
A) The mean of the sampling distribution is always .
B) The standard deviation of the sampling distribution is always .
C) The shape of the sampling distribution is always approximately normal.
D) All of the above are true.
Q5) Referring to Table 7-7, the population mean of all possible sample proportions is ________.
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Chapter 8: Confidence Interval Estimation
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Sample Questions
Q1) Referring to Table 8-13, construct a 95% confidence interval estimate of the population proportion of managers who have caught salespeople working a second job on company time.
Q2) The head of a computer science department is interested in estimating the proportion of students entering the department who will choose the new computer engineering option. Suppose there is no information about the proportion of students who might choose the option. What size sample should the department head take if she wants to be 95% confident that the estimate is within 0.10 of the true proportion?
Q3) Given a sample mean of 2.1 and a population standard deviation of 0.7 from a sample of 10 data points, a 90% confidence interval will have a width of 2.36.
A)True
B)False
Q4) Referring to Table 8-6, 95% of the people will recognize the product between 36% and 54% of the time.
A)True
B)False
Q5) Referring to Table 8-4, a 99% confidence interval for the mean voltage of the power packs is from ________ to ________.
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Chapter 9: Fundamentals of Hypothesis Testing:
One-Sample Tests
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Sample Questions
Q1) Referring to Table 9-3, the population of interest is
A) the power consumption in the 20 microwave ovens.
B) the power consumption in all such microwave ovens.
C) the mean power consumption in the 20 microwave ovens.
D) the mean power consumption in all such microwave ovens.
Q2) Referring to Table 9-8, the largest level of significance at which the null hypothesis will not be rejected is ________.
Q3) Referring to Table 9-8, state the null hypothesis for this study.
Q4) Referring to Table 9-9, the president can conclude that there is sufficient evidence to show that the mean SAT score of the entering class this year is lower than previous years with no more than a 5% probability of incorrectly rejecting the true null hypothesis.
A)True
B)False
Q5) Referring to Table 9-1, the parameter the manager is interested in is
A) the mean number of defective light bulbs per case produced at the plant.
B) the mean number of defective light bulbs per case among the 46 cases.
C) the mean number of defective light bulbs per case produced during the morning shift.
D) the proportion of cases with defective light bulbs produced at the plant.
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Chapter 10: Two-Sample Tests
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Sample Questions
Q1) Referring to Table 10-3, what is the estimated standard error of the difference between the 2 sample means?
A) 4.06
B) 5.61
C) 8.01
D) 16.00
Q2) When the sample sizes are equal, the pooled variance of the two groups is the average of the 2 sample variances.
A)True
B)False
Q3) Referring to Table 10-15, what additional assumption is needed for the test to be valid?
A) The two sample sizes have to be equal.
B) The two population sizes have to be equal.
C) The two population means have to be the same.
D) The population distributions of the two annual salaries have to be normal.
Q4) Referring to Table 10-2, what is the 99% confidence interval estimate for the difference between two means?
Q5) Referring to Table 10-4, the computed t statistic is ________.
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Chapter 11: Analysis of Variance
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Sample Questions
Q1) Referring to Table 11-4, the test is valid only if the population of crop yields has the same variance for the 3 varieties.
A)True
B)False
Q2) Referring to Table 11-12, the mean square for the factor shape is ________.
Q3) Referring to Table 11-8, the relative efficiency means that 15.23 times as many observations in each brand would be needed in a one-way ANOVA design as compared to the randomized block design in order to obtain the same precision for comparison of the different means.
A)True
B)False
Q4) Referring to Table 11-3, what is the critical value of Levene's test for homogeneity of variances at a 5% level of significance?
Q5) Referring to Table 11-4, the decision made at 0.005 level of significance implies that all 3 means are significantly different.
A)True
B)False
Q6) Referring to Table 11-3, the within group variation or SSW is ________.
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Chapter 12: Chi-Square Tests and Nonparametric Tests
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Sample Questions
Q1) Referring to Table 12-17, the hypotheses that should be used are
A) H?: ?? = ?? versus H?: ?? ? ??.
B) H?: ?? ? ?? versus H?: ?? > ??.
C) H?: M? = M? versus H?: M? ? M?.
D) H?: M? ? M? versus H?: M? > M?.
Q2) Referring to Table 12-5, what is the value of the critical range for the Marascuilo procedure to test for the difference in proportions between procedure C and procedure D using a 0.05 level of significance?
Q3) Referring to Table 12-6, what is the form of the alternative hypothesis?
A) H?: ?? ? ?? ? ??
B) H?: ?? ? ?? = ??
C) H?: ?? = ?? ? ??
D) H?: not all R? are the same
Q4) Referring to Table 12-5, the decision made suggests that the 4 procedures all have different proportions of clear operations.
A)True
B)False
Q5) Referring to Table 12-7, the critical value of the test is ________.
Q6) Referring to Table 12-6, what is the p-value of the test statistic?
Page 14
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Chapter 13: Simple Linear Regression
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Sample Questions
Q1) If you wanted to find out if alcohol consumption (measured in fluid oz.)and grade point average on a 4-point scale are linearly related, you would perform a
A) X² test for the difference in two proportions.
B) X² test for independence.
C) a Z test for the difference in two proportions.
D) a t test for a correlation coefficient.
Q2) Referring to Table 13-2, what percentage of the total variation in candy bar sales is explained by prices?
A) 100%
B) 88.54%
C) 78.39%
D) 48.19%
Q3) Referring to Table 13-13, the decision on the test of whether composite score depends linearly on spending per student using a 10% level of significance is to ________ (reject or not reject)H .
Q4) Referring to Table 13-11, what is the standard deviation around the regression line?
Q5) Referring to Table 13-13, the regression mean square (MSR)of the above regression is
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Chapter 14: Introduction to Multiple Regression
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Sample Questions
Q1) Referring to Table 14-6, what is your decision and conclusion for the test H?: ?? = 0 vs H?: ?? < 0 at the ? = 0.01 level of significance using Model 1?
A) Do not reject H? and conclude that the amount of insulation has a linear effect on heating cots.
B) Reject H? and conclude that the amount of insulation does not have a linear effect on heating costs.
C) Reject H? and conclude that the amount of insulation has a negative linear effect on heating costs.
D) Do not reject H? and conclude that the amount of insulation has a negative linear effect on heating costs.
Q2) Referring to Table 14-10, to test the significance of the multiple regression model, what is the form of the null hypothesis?
A) H?: ??
B) H?: ??
C) H?: ?? = ?? = ??
D) H?: ?? = ?? = ?? = ??
Q3) Referring to Table 14-15, what is the standard error of estimate?
Q4) Referring to Table 14-8, the net regression coefficient of X is ________.
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Chapter 15: Multiple Regression Model Building
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Sample Questions
Q1) In stepwise regression, an independent variable is not allowed to be removed from the model once it has entered into the model.
A)True
B)False
Q2) Referring to Table 15-4, the "best" model chosen using the adjusted R-square statistic is
A) X?,X?.
B) X?,X?,X?.
C) Either of the above
D) None of the above
Q3) In multiple regression, the ________ procedure permits variables to enter and leave the model at different stages of its development.
Q4) Referring to Table 15-6, the variable X? should be dropped to remove collinearity.
A)True
B)False
Q5) Referring to Table 15-5, what is the value of the variance inflationary factor of Cargo Vol?
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Chapter 16: Time-Series Forecasting
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Sample Questions
Q1) Referring to Table 16-13, what is your forecast for the 13 month using the quadratic-trend model?
Q2) The MAD is a measure of the mean of the absolute discrepancies between the actual and the fitted values in a given time series.
A)True
B)False
Q3) Referring to Table 16-13, what is the value of the t test statistic for testing the appropriateness of the second-order autoregressive model?
Q4) Referring to Table 16-11, based on the parsimony principle, the second-order model is the better model for making forecasts.
A)True
B)False
Q5) Referring to Table 16-4, a centered 5-year moving average is to be constructed for the wine sales. The number of moving averages that will be calculated is ________.
Q6) Referring to Table 16-5, the number of arrivals will be exponentially smoothed with a smoothing constant of 0.1. The smoothed value for the second Monday will be ________.
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Chapter 17: Statistical Applications in Quality Management
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Sample Questions
Q1) Referring to Table 17-10, a c chart is to be constructed for the number of defective items. The center line of this c chart is located at ________.
Q2) Maintaining the gains that have been made with a revised process in the long term by avoiding potential problems that can occur when a process is changed involves which part of the DMAIC process?
A) Define
B) Measure
C) Analyze
D) Improve
E) Control
Q3) Referring to Table 17-8, an R chart is to be constructed for the time required to register. One way to create the lower control limit involves multiplying the mean of the sample ranges by D . For this data set, the value of D is ________.
Q4) Referring to Table 17-5, the process seems to be in control.
A)True
B)False
Q5) Referring to Table 17-10, a c chart is to be constructed for the number of defective items. The upper control limits is ________.
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Chapter 18: A Roadmap for Analyzing Data
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Sample Questions
Q1) A contractor wants to forecast the number of contracts in future quarters, using quarterly data on number of contracts during the 10-year period from 2001 to 2010. Which of the following would be the most appropriate analysis to perform?
A) Autoregressive modeling
B) One-way ANOVA
C) Least-squares forecasting with monthly or quarterly data
D) Two-way ANOVA
Q2) Data on the amount of money made in a year by 1,000 families in a small town were collected. You want to know how much each family will get if the money made by all the 1,000 families is pooled together and then evenly redistributed back to them. Which of the following would you compute?
A) Arithmetic mean
B) Median
C) Interquartile range
D) Coefficient of correlation
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