Applied Business Statistics
Exam Practice Tests
Course Introduction
Applied Business Statistics focuses on the practical application of statistical methods and analysis within a business context. The course covers foundational topics such as data collection, data visualization, descriptive statistics, probability distributions, sampling methods, hypothesis testing, regression analysis, and statistical inference. Emphasizing real-world business decision-making, students learn to interpret and communicate statistical findings, use statistical software, and apply statistical reasoning to solve problems related to quality control, market analysis, and forecasting. By the end of the course, students will be equipped with analytical tools essential for extracting insights from data, supporting evidence-based business strategies, and improving organizational performance.
Recommended Textbook
Basic Business Statistics Concepts and Applications 12th Edition by Mark L. Berenson
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Chapter 1: Introduction
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Sample Questions
Q1) Referring to Table 1-1, the possible responses to the question "How many DVD players made by other manufacturers have you used?" are values from a
A) discrete random variable.
B) continuous random variable.
C) categorical random variable.
D) parameter.
Answer: A
Q2) The Human Resources director of a large corporation wishes to develop an employee benefits package and decides to select 500 employees from a list of all (N = 40,000) workers in order to study their preferences for the various components of a potential package. The 500 employees who will participate in this study constitute the ________.
Answer: sample
Q3) Marital status is an example of a numerical variable.
A)True
B)False
Answer: False
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Chapter 2: Organizing and Visualizing Data
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Sample Questions
Q1) The width of each bar in a histogram corresponds to the A) differences between the boundaries of the class.
B) number of observations in each class.
C) midpoint of each class.
D) percentage of observations in each class.
Answer: A
Q2) Referring to Table 2-14, of those who did not own a portable DVD in the sample, ________ percent were males.
Answer: 48.28%
Q3) Referring to Table 2-5, what is the width of each class?
A) 1 minute
B) 5 minutes
C) 2%
D) 100%
Answer: B
Q4) Referring to Table 2-12, construct a table of row percentages.
Answer: For Neutral Against Totals
Page 4
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Chapter 3: Numerical Descriptive Measures
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Sample Questions
Q1) You were told that the 1 , 2 and 3 quartiles of female students' weight at a major university are 95 lbs, 125 lbs, and 138 lbs. What percentage of the students weigh less than 95 lbs?
Answer: 25 percent
Q2) Referring to Table 3-11, how will you classify the linear relationship between the DJIA and the S&P 500 index?
A) Weak
B) Moderate
C) Strong
D) No relationship
Answer: C
Q3) Referring to Table 3-5, compute the geometric mean rate of return per year for the first four years.
Answer: 4.73%
Q4) Which of the following is not sensitive to extreme values?
A) The range
B) The standard deviation
C) The interquartile range
D) The coefficient of variation
Answer: C
Page 5
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Chapter 4: Basic Probability
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Sample Questions
Q1) Referring to Table 4-4, the two events "preferring water" and "being a male" are independent.
A)True
B)False
Q2) Referring to Table 4-12, if Jake, in fact, gets to the test on time, what is the probability that he took the bus?
Q3) If P(A or B) = 1.0, then A and B must be collectively exhaustive.
A)True
B)False
Q4) Suppose A and B are independent events where P(A) = 0.4 and P(B) = 0.5. Then P(A or B) = ________.
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) = ________.
Q6) Referring to Table 4-10, what is the probability that a randomly selected worker is white and had claimed bias?
Q7) Referring to Table 4-8, what percentage of the students live in a dormitory?
Page 6
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Chapter 5: Discrete Probability Distributions
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Sample Questions
Q1) Suppose that past history shows that 60% of college students prefer Coca-Cola. A sample of 10 students is to be selected. Which of the following distributions would you use to figure out the probability that at least half of them will prefer Coca-Cola?
A) Binomial distribution
B) Poisson distribution
C) Normal distribution
D) Hypergeometric distribution
Q2) Suppose that past history shows that 60% of college students prefer Brand C cola. A sample of 5 students is to be selected. The probability that more than 3 prefer Brand C is
Q3) The number of 911 calls in Butte, Montana, has a Poisson distribution with a mean of 10 calls a day. The probability of seven 911 calls in a day is ________.
Q4) The number of power outages at a nuclear power plant has a Poisson distribution with a mean of 6 outages per year. The probability that there will be at least 3 power outages in a year is ________.
Q5) The largest value that a Poisson random variable X can have is n.
A)True
B)False
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Chapter 6: The Normal Distribution and Other Continuous
Distributions
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Sample Questions
Q1) The interval between patients arriving at an outpatient clinic follows an exponential distribution at a rate of 15 patients per hour. What is the probability that a randomly chosen arrival to be less than 15 minutes?
Q2) The probability that a standard normal random variable, Z, is between 1.00 and 3.00 is 0.1574.
A)True
B)False
Q3) The amount of time between successive TV watching by first graders follows an exponential distribution with a mean of 10 hours. The probability that a given first grader spends less than 20 hours between successive TV watching is ________.
Q4) Suppose the probability of producing a defective light bulb from a production line is the same over an interval of 90 minutes. Which of the following distributions would you use to determine the probability that a defective light bulb will be produced in a 15 minutes interval?
A) Normal distribution
B) Poisson distribution
C) Uniform distribution
D) Exponential distribution
Page 8
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Chapter 7: Sampling and Sampling Distributions
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Sample Questions
Q1) If the amount of gasoline purchased per car at a large service station has a population mean of 15 gallons and a population standard deviation of 4 gallons and a random sample of 64 cars is selected, there is approximately a 95.44% chance that the sample mean will be between 14 and 16 gallons.
A)True
B)False
Q2) As the size of the sample is increased, the standard deviation of the sampling distribution of the sample mean for a normally distributed population will stay the same.
A)True
B)False
Q3) If the amount of gasoline purchased per car at a large service station has a population mean of 15 gallons and a population standard deviation of 4 gallons and a random sample of 4 cars is selected, there is approximately a 68.26% chance that the sample mean will be between 13 and 17 gallons.
A)True
B)False
Q4) ________ results from the exclusion of certain groups of subjects from a population frame.
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Chapter 8: Confidence Interval Estimation
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Sample Questions
Q1) Referring to Table 8-10, what is the upper bound of the 90% one-sided confidence interval for the proportion of students who had used illicit drugs during the last 12 months?
Q2) A point estimate consists of a single sample statistic that is used to estimate the true population parameter.
A)True
B)False
Q3) Holding the level of confidence fixed, increasing the sample size will lead to a wider confidence interval.
A)True
B)False
Q4) Referring to Table 8-2, the confidence interval is valid only if the lengths cut are normally distributed.
A)True
B)False
Q5) Referring to Table 8-5, it is possible that the mean of the population is not between 47.19 and 52.61.
A)True
B)False
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Chapter 9: Fundamentals of Hypothesis Testing:
One-Sample Tests
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Sample Questions
Q1) For a given sample size n, if the level of significance ( ) is decreased, the power of the test
A) will increase.
B) will decrease.
C) will remain the same.
D) cannot be determined.
Q2) The value that separates a rejection region from a non-rejection region is called the ________.
Q3) Suppose, in testing a hypothesis about a mean, the Z test statistic is computed to be 2.04. The null hypothesis should be rejected if the chosen level of significance is 0.01 and a two-tail test is used.
A)True
B)False
Q4) The larger the p-value, the more likely you are to reject the null hypothesis. A)True
B)False
Q5) Referring to Table 9-8, state the null hypothesis for this study.
Page 11
Q6) Referring to Table 9-9, state the null hypothesis for this study.
Q7) Referring to Table 9-3, the p-value of the test is ________.
Q8) Referring to Table 9-4, the p-value of the test is ________.
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Chapter 10: Two-Sample Tests
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Sample Questions
Q1) Referring to Table 10-10, construct a 95% confidence interval estimate of the difference in proportion of workers who would like to attend a self-improvement course in the recent study and the past study.
Q2) Referring to Table 10-5, the value of the standard error of the difference scores is A) 65.027. B) 60.828.
C) 22.991.
D) 14.696.
Q3) Referring to Table 10-15, suppose = 0.05. Which of the following represents the correct conclusion for a test on a difference in the variances?
A) There is no evidence of a difference in the variances.
B) There is evidence of a difference in the variances.
C) There is no evidence that the variances are the same.
D) There is evidence that variances are the same.
Q4) Referring to Table 10-6, what is the 99% confidence interval estimate for the mean difference in weight before and after the diet?
Q5) Referring to Table 10-12, the p-value of the test is ________.
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Chapter 11: Analysis of Variance
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Sample Questions
Q1) Referring to Table 11-12, based on the results of the hypothesis test, it appears that there is a significant interaction.
A)True
B)False
Q2) Referring to Table 11-7, what is the estimated relative efficiency?
Q3) Referring to Table 11-5, what is the critical value of Levene's test for homogeneity of variances at a 5% level of significance?
Q4) Referring to Table 11-4, the among-group variation or SSA is ________.
Q5) Referring to Table 11-2, what should be the conclusion for the Levene's test for homogeneity of variances at a 5% level of significance?
A) There is insufficient evidence that the variances are all the same.
B) There is sufficient evidence that the variances are all the same.
C) There is insufficient evidence that the variances are not all the same.
D) There is sufficient evidence that the variances are not all the same.
Q6) Referring to Table 11-8, what is the value of the F test statistic for testing the block effects?
Q7) Referring to Table 11-3, what is the value of the test statistic for Levene's test for homogeneity of variances?
Page 14
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Chapter 12: Chi-Square Tests and Nonparametric Tests
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Sample Questions
Q1) Referring to Table 12-16, which is the appropriate test to use?
A) X²-test of independence
B) McNemar test
C) Wilcoxon rank sum test
D) X²-test of population variance
Q2) Referring to Table 12-5, there is sufficient evidence to conclude that the proportions between procedure B and procedure C are different at a 0.05 level of significance.
A)True
B)False
Q3) Referring to Table 12-6, there is sufficient evidence to conclude that the proportions between year 1 and year 2 are different at a 0.05 level of significance.
A)True
B)False
Q4) Referring to Table 12-2, the same decision would be made with this test if the level of significance had been 0.01 rather than 0.05.
A)True
B)False
Q5) Referring to Table 12-11, the critical value of the test is ________.
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Chapter 13: Simple Linear Regression
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Sample Questions
Q1) Referring to Table 13-4, suppose the managers of the brokerage firm want to construct a 99% prediction interval for the sales made by a broker who has brought into the firm 18 new clients. The prediction interval is from ________ to ________.
Q2) Referring to Table 13-4, suppose the managers of the brokerage firm want to construct both a 99% confidence interval estimate and a 99% prediction interval for X = 24. The confidence interval estimate would be the ________ (wider or narrower) of the two intervals.
Q3) Referring to Table 13-3, set up a scatter plot.
Q4) A zero population correlation coefficient between a pair of random variables means that there is no linear relationship between the random variables. A)True B)False
Q5) 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 .
Q6) Referring to Table 13-3, the least squares estimate of the Y-intercept is ________.
Q7) Referring to Table 13-3, the total sum of squares (SST) is ________.
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Chapter 14: Introduction to Multiple Regression
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Sample Questions
Q1) Referring to Table 14-17 and using both Model 1 and Model 2, the null hypothesis for testing whether the independent variables that are not significant individually are also not significant as a group in explaining the variation in the dependent variable should be rejected at a 5% level of significance?
A)True
B)False
Q2) Referring to Table 14-17 Model 1, there is sufficient evidence that the number of weeks a worker is unemployed due to a layoff depends on at least one of the explanatory variables at a 10% level of significance.
A)True
B)False
Q3) Referring to Table 14-15, what is the p-value of the test statistic to determine whether there is a significant relationship between percentage of students passing the proficiency test and the entire set of explanatory variables?
Q4) Referring to Table 14-8, the critical value of an F test on the entire regression for a level of significance of 0.01 is ________.
Q5) Referring to Table 14-7, the net regression coefficient of X is ________.
Q6) Referring to Table 14-17 Model 1, what is the standard error of estimate?
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Chapter 15: Multiple Regression Model Building
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Sample Questions
Q1) In multiple regression, the ________ procedure permits variables to enter and leave the model at different stages of its development.
Q2) Referring to Table 15-3, suppose the chemist decides to use a t test to determine if the linear term is significant. Using a level of significance of 0.05, she would decide that the linear term is significant.
A)True
B)False
Q3) Referring to Table 15-5, there is reason to suspect collinearity between some pairs of predictors based on the values of the variance inflationary factor.
A)True
B)False
Q4) Using the best-subsets approach to model building, models are being considered when their
A) Cp > k.
B) Cp k.
C) Cp > (k + 1).
D) Cp (k + 1).
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Chapter 16: Time-Series Forecasting
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Sample Questions
Q1) Referring to Table 16-12, in testing the significance of the coefficient of X in the regression equation (0.012) which has a p-value of 0.0000. Which of the following is the best interpretation of this result?
A) The quarterly growth rate in revenues is significantly different from 0% ( = 0.05).
B) The quarterly growth rate in revenues is not significantly different from 0% ( = 0.05).
C) The quarterly growth rate in revenues is significantly different from 1.2% ( = 0.05).
D) The quarterly growth rate in revenues is not significantly different from 1.2% ( = 0.05).
Q2) Referring to Table 16-6, the estimate of the amount by which sales (in millions of dollars) is increasing each year is ________.
Q3) Referring to Table 16-13, what is the exponentially smoothed forecast for the 13 month using a smoothing coefficient of W = 0.25 if the exponentially smooth value for the 10 and 11 month are 9,477.7776 and 9,411.8332, respectively?
Q4) Referring to Table 16-6, the forecast for sales (in millions of dollars) in 2015 is ________.
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Chapter 17: Statistical Applications in Quality Management
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Sample Questions
Q1) Referring to Table 17-4, suppose the supervisor constructs an R chart to see if the variability in collection times is in-control. What is the center line of this R chart?
A) 20.00
B) 20.56
C) 20.40
D) 24.00
Q2) Which of the following is not part of the Shewhart-Deming cycle?
A) Plan
B) Do
C) React
D) Act
Q3) Referring to Table 17-9, estimate the percentage of the cans whose weight is inside the specification limit.
Q4) One of the morals of the red bead experiment is that variation is part of any process.
A)True
B)False
Q5) Referring to Table 17-6, the estimate of the proportion of poor quality bags of candy is ________.
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Chapter 18: A Roadmap for Analyzing Data
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Sample Questions
Q1) An insurance company evaluates many variables about a person before deciding on an appropriate rate for automobile insurance. A representative from a local insurance agency selected a random sample of 100 insured drivers and recorded X, the amount of claims each made in the last 3 years. A Pareto chart can be used to present this information.
A)True
B)False
Q2) The opinions (classified as "for," "neutral" or "against") of a sample of 200 people broken down by gender about the latest congressional plan to eliminate anti-trust exemptions for professional baseball. You can present this information using a scatter plot.
A)True
B)False
Q3) A sample of 200 students at a Big-Ten university was taken after the midterm to ask whether they went bar hopping the weekend before the midterm or spent the weekend studying, and whether they did well or poorly on the midterm. You can use a contingency table to present this information.
A)True
B)False
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Chapter 19: Questions that Involve Online Topics
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Sample Questions
Q1) The Laspeyres price index has the disadvantage that the consumption pattern in the initial period might be quite different from that in the current period and, hence, does not reflect accurately the current consumption cost.
A)True
B)False
Q2) Based on past experience, only 0.5% of the invoices of a company contain an error. Out of the 1,500 invoices that the company will issue, what is the approximate probability that at least 4 invoices will contain an error?
Q3) Blossom's Flowers purchases roses for sale for Valentine's Day. The roses are purchased for $10 a dozen and are sold for $20 a dozen. Any roses not sold on Valentine's Day can be sold for $5 per dozen. The owner will purchase 1 of 3 amounts of roses for Valentine's Day: 100, 200, or 400 dozen roses. Given 0.2, 0.4, and 0.4 are the probabilities for the sale of 100, 200, or 400 dozen roses, respectively, then the EMV for buying 200 dozen roses is
A) $4,500.
B) $2,500.
C) $1,700.
D) $1,000.
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