Applied Business Statistics
Final Exam Questions
Course Introduction
Applied Business Statistics explores statistical concepts and techniques essential for analyzing data in business contexts. The course covers descriptive statistics, probability distributions, sampling methods, hypothesis testing, regression analysis, and data interpretation. Emphasizing practical applications, students learn to use statistical software to solve real-world business problems, make informed decisions, and communicate findings effectively. By integrating case studies and hands-on projects, the course prepares students to critically analyze quantitative information and apply statistical reasoning in various business functions.
Recommended Textbook
Statistical Techniques in Business and Economics 16th Edition by Douglas Lind
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Page 2
Chapter 1: What Is Statistics
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Sample Questions
Q1) Statistics are used to report the summary results of market surveys.
A)True
B)False
Answer: True
Q2) Data measured on a nominal scale can only be classified into categories.
A)True
B)False
Answer: True
Q3) The principal difference between the interval and ratio scale is that the ratio scale has a meaningful zero point.
A)True
B)False
Answer: True
Q4) The "highest" level of measurement is ______________. Answer: ratio
Q5) The branch of statistics that collects, analyzes, and presents data is called _____________ statistics.
Answer: descriptive
Q6) The monthly consumer price index is called a(n) ______________. Answer: statistic
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Chapter 2: Describing Data: Frequency Tables, Frequency
Distributions, and Graphic Presentation
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Q1) The first three class marks for a frequency distribution of "weights of college men" recorded to the nearest pound are 105, 115, and 125. What is the lower limit for the third class?
Answer: 120
Explanation: The class interval is 10. The class marks are the same as the class midpoints. Therefore, the upper and lower limits for a class are the class mark plus or minus half of the class interval. For the third class, the lower limit is 125 - ½(10) = 120.
Q2) A frequency distribution for nominal data requires that the categories be ___________________ and _____________________.
Answer: exhaustive ; mutually exclusive
Q3) In a relative frequency distribution, the sum of the relative class frequencies is _____________________.
Answer: 100
Q4) To summarize the gender of students attending a college in a frequency distribution, a total of at least ______ classes would be required.
Answer: two
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Page 4
Chapter 3: Describing Data: Numerical Measures
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Sample Questions
Q1) For any data set, Chebyshev's theorem estimates the proportion of observations that occurs within k standard deviations of the mean, where k is greater than 1.0.
A)True
B)False
Answer: True
Q2) The sum of the deviations of each data value from this measure of central location will always be zero.
A) Mode
B) Mean
C) Median
D) Standard deviation
Answer: B
Q3) A statistic computed by summing all of the values of a distribution and dividing by the number of values is called the __________.
Answer: mean
Q4) Extremely high or low scores affect the value of the median.
A)True
B)False
Answer: False
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Chapter 4: Describing Data: Displaying and Exploring Data
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Sample Questions
Q1) A stem-and-leaf display includes the following row: 3 | 0 1 3 5 7 9. Assume that the data is rounded to the nearest whole number. Which of the following statements is true?
A) The frequency of the class is seven.
B) The minimum value in the class is 0.
C) The maximum value in the class is 39.
D) The class interval is 5.
Q2) A box plot shows the skewness of a distribution.
A)True
B)False
Q3) Quartiles divide a frequency distribution into _______ equal parts.
Q4) A scatter diagram shows the ____________ between two interval or ratio variables.
Q5) The "box" in a box plot shows the interquartile range.
A)True B)False
Q6) A dot plot is useful for quickly graphing frequencies in a small data set.
A)True B)False
Q7) Percentiles divide a frequency distribution into _________ equal parts.
Page 6
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Chapter 5: A Survey of Probability Concepts
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Q1) A measured or observed activity is called a(n) ___________.
Q2) Dice are used in a variety of games. A die is a six-sided cube with a number of dots on each side. The number of dots ranges from one to six. If two die are used in a game, how many outcomes are possible?
Q3) The joint probability of two independent events, A and B, is computed as P(A and B) = P(A) P(B).
A)True
B)False
Q4) A new computer game has been developed and 80 veteran game players will test its market potential. If 60 players liked the game, the probability that any veteran game player will like the new computer game is ______.
Q5) If two events A and B are mutually exclusive, what does the special rule of addition state?
A) P(A or B) = P(A) + P(B)
B) P(A and B) = P(A) + P(B)
C) P(A and/or B) = P(A) + P(B)
D) P(A or B) = P(A) - P(B)
Q6) The probability that a flipped coin will show heads on four consecutive flips is
Page 7
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Chapter 6: Discrete Probability Distributions
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Q1) The arrival of customers at a service desk follows a Poisson distribution. If they arrive at a rate of four every five minutes, what is the probability that more than four customers arrive in a five-minute period?
Q2) Affirmative action commitments by many organizations have led to an increase in the number of women in executive positions. Satellite Office Systems has vacancies for two executives that it will fill from among four women and six men. To do this, the _______ probability distribution should be applied.
Q3) David's gasoline station offers 4 cents off per gallon if the customer pays in cash and does not use a credit card. Past evidence indicates that 40% of all customers pay in cash. During a one-hour period, 15 customers buy gasoline at this station. What is the probability that all 15 pay in cash?
A) 0.0
B) 0.1
C) 0.9
D) 1.0
Q4) A _______________ random variable can assume only a certain number of separated values.
Q5) In a Poisson distribution, each trial is ___________________.
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Chapter 7: Continuous Probability Distributions
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Sample Questions
Q1) For a standard normal distribution, what is the probability that z is greater than 1.75?
A) 0.0401
B) 0.0459
C) 0.4599
D) 0.9599
Q2) The number of different standard normal distributions is unlimited.
A)True
B)False
Q3) The proportion of the area under a normal curve that is to the right of a z score, and that is equal to zero, is ________.
Q4) What is the area under the normal curve between z = 0.0 and z = 1.79?
A) 0.4633
B) 0.0367
C) 0.9599
D) 0.0401
Q5) For normally distributed random variables, the _________ makes probability statements based on specific values of the standard deviation.
Q6) The exponential distribution is applied to situations characterized by _______.
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Chapter 8: Sampling Methods and the Central Limit
Theorem
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Sample Questions
Q1) A marketing firm is studying consumer preferences for winter fashions in four different months. From a population of women 18 to 21 years of age, a random sample of 100 women was selected in January. Another random sample of 100 women was selected in March. Another random sample of 100 women was selected in June. Another random sample of 100 women was selected in September. What is the sample size?
A) 4
B) 100
C) 400
D) 1
Q2) Manufacturers were subdivided into groups by volume of sales. Those with more than $100 million in sales were classified as large; those from $50 to $100 million as medium size; and those between $25 and $50 million, and so on. Samples were then selected from each of these groups. What is this type of sampling called?
A) Simple random sampling
B) Stratified random sampling
C) Cluster sampling
D) Systematic sampling
Q3) How is the central limit theorem helpful when computing probabilities?
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Chapter 9: Estimation and Confidence Intervals
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Q1) A local health care company wants to estimate the mean weekly elder day-care cost. A sample of 10 facilities shows a mean of $250 per week, with a standard deviation of $25. What is the 90% confidence interval for the population mean?
Q2) To determine the size of a sample, the standard deviation of the population must be estimated by either taking a pilot survey or by approximating it based on knowledge of the population.
A)True B)False
Q3) A university wants to determine the proportion of students who use a cash card to pay at the university food service. Out of 100 students surveyed, 65 students use a cash card. What is the 95% confidence interval for the population proportion?
Q4) A company wants to estimate next year's total revenue. Why is an interval estimate preferred to a point estimate?
Q5) The interval within which a population parameter is expected to lie is called a __________.
Q6) A confidence interval becomes narrower when the sample size _________.
Q7) For a given confidence level, the value of t ___________ as the sample size increases.
Page 11
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Chapter 10: One-Sample Tests of Hypothesis
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Sample Questions
Q1) A hypothesis regarding the weight of newborn infants at a community hospital is that the mean is 6.6 pounds. A sample of seven infants is randomly selected and their weights at birth are recorded as 9.0, 7.3, 6.0, 8.8, 6.8, 8.4, and 6.6 pounds. What are the degrees of freedom?
A) 7
B) 8
C) 6
D) 6.6
Q2) For a one-tailed hypothesis test, the computed test statistic is z = -2.10. What is the p-value?
Q3) A manufacturer wants to increase the shelf life of a line of cake mixes. Past records indicate that the average shelf life of the mix is 216 days. After a revised mix has been developed, a sample of nine boxes of cake mix had a mean of 217.222 days and a standard deviation of 1.2019 days. What is the computed value of the test statistic?
Q4) The critical t statistic for the alternative hypothesis, H<sub>1</sub>: µ < 12, a 0.005 level of significance, and a sample size of 20 is ______.
Q5) How is the significance level related to the probability of a Type I error?
Q6) When planning an experiment, how is a significance level related to sample size?
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Chapter 11: Two-Sample Tests of Hypothesis
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Sample Questions
Q1) When testing the difference between two population means, the sample variances are pooled to estimate the population variance when ________________.
A) The population variances are known and equal
B) The population means are known
C) The population variances are assumed unequal and unknown
D) The population variances are assumed equal but unknown
Q2) What is the critical value of t for the claim that the difference of two means is less than zero with = 0.025 and sample sizes of nine and seven? Assume equal population standard deviations.
Q3) When testing the difference between two dependent population means, the test statistic is based on a ______________.
A) Pooled variance
B) Standard deviation of the differences
C) Pooled proportion
D) Sum of the population variances
Q4) When testing for a difference between the means of two dependent samples, the sample test statistic is a ______________.
Q5) The paired difference test has ___________ degrees of freedom.
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Chapter 12: Analysis of Variance
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Sample Questions
Q1) When testing for differences between treatment means, the degrees of freedom for the t statistic are ___________.
A) k
B) (n - 1)
C) (n - k)
D) (1/n<sub>1</sub> + 1/n<sub>2</sub>)
Q2) Which statement is correct about the F distribution?
A) Cannot be negative
B) Cannot be positive
C) Is the same as the t distribution
D) Is the same as the z distribution
Q3) A company compared the variance of salaries for employees who have been employed for 5 years or less with employees who have been employed for 10 years or more. They randomly selected 21 employees with 5 years or less experience and 15 employees with 10 years or more experience. The standard deviation for the group with 5 years or less experience was $2,225; the standard deviation for the group with 10 years or more experience was $1,875. What is the F test statistic for the hypothesis test?
Q4) In ANOVA, when we do not reject the null hypothesis, ______ inference is made about the population means.
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Chapter 13: Correlation and Linear Regression
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Sample Questions
Q1) The values of a and b in the regression equation are called the regression coefficients.
A)True
B)False
Q2) What are the inputs and the output of linear regression?
Q3) If the correlation coefficient has a negative value, then the coefficient of determination:
A) can take on either a negative or positive value.
B) must be positive.
C) will also have a negative value.
D) will equal zero.
Q4) In the regression equation, what does the letter "b" represent?
A) The Y-intercept
B) The slope of the line
C) Any value of the independent variable that is selected
D) The value of Y when X = 0
Q5) What is the purpose of measuring correlation?
Q6) The standard error of the estimate measures the scatter or dispersion of the observed values around a ___________________.
Q7) What is the purpose of transformations in regression analysis?
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Chapter 14: Multiple Regression Analysis
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Sample Questions
Q1) For a global test of a multiple regression equation, the F distribution is defined by the regression and residual degrees of freedom.
A)True
B)False
Q2) The best example of a null hypothesis for testing an individual regression coefficient is __________.
A) H<sub>0</sub>: <sub>1</sub> = <sub>2</sub> = <sub>3</sub> = <sub>4</sub> = 0
B) H<sub>0</sub>: µ<sub>1</sub> = µ<sub>2</sub> = µ<sub>3</sub> = µ<sub>4</sub> = 0
C) H<sub>0</sub>: <sub>1</sub> = 0
D) H<sub>0</sub>: <sub>1</sub> 0
Q3) In a multiple regression analysis with five independent variables, the null hypothesis, H<sub>0</sub>: <sub>4</sub> = 0, is not rejected. When predicting the dependent variable, the independent variable, X<sub>4</sub>, has ______ relationship to the dependent variable.
Q4) In multiple regression, the form of the global hypothesis test is ____________.
Q5) In the ANOVA table for a multiple regression analysis, the regression degrees of freedom is equal to ___________________.
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Chapter 15: Nonparametric Methods: Nominal Level
Hypothesis Tests
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Sample Questions
Q1) The shape of the chi-square distribution depends on the size of the sample. A)True
B)False
Q2) What is the critical value at the 0.05 level of significance for a goodness-of-fit test if there are six categories?
A) 3.841
B) 5.991
C) 7.815
D) 11.070
Q3) To test a hypothesis to verify that an observed frequency distribution data is normally distributed, the expected frequencies are _______________ distributed.
Q4) If we are testing the difference between two population proportions, it is assumed that the two populations are approximately normal and have equal variances.
A)True
B)False
Q5) In a contingency table, the decision to reject the null hypothesis is based on a __________ test statistic.
Page 17
Q6) The shape of the chi-square distribution is _________________.
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Chapter 16: Nonparametric Methods: Analysis of Ordinal
Data
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Q1) A two-tailed test of hypothesis was conducted and 60 values were above the median. The computed z = 1.90. At the 0.05 level, what is the decision regarding the null hypothesis?
A) Reject the null hypothesis with a 0.05 Type I error rate.
B) Fail to reject the null hypothesis.
C) Reject the null hypothesis with a 0.025 Type I error rate.
D) None of these.
Q2) A nonparametric test requires that the data can be:
A) ranked.
B) summed.
C) graphed.
D) transformeD.
Q3) The sign test requires the populations to be _____________.
Q4) Which statement is true when using the sign test and a large sample?
A) The chi-square value is applied to arrive at the degrees of freedom.
B) A normal distribution should be used to approximate a binomial distribution.
C) Wilcoxon z is the test statistic.
D) The F distribution is applieD.
Page 18
Q5) The Kruskal-Wallis method tests the hypothesis that ____________ or more population means are equal.
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Chapter 17: Index Numbers
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Q1) The Laspeyres method uses the amounts consumed in the base period, q<sub>0</sub>, as weights to determine a price index.
A)True B)False
Q2) One function of the CPI is to allow consumers to determine the degree to which their purchasing power is being eroded by price increases.
A)True B)False
Q3) The _________ method for computing a weighted price index uses current year weights.
Q4) The S&P 500 is a _______________________.
Q5) Suppose your annual 2001 salary was $40,000 and your 2006 salary was $52,000. Assume the annual CPI rose from 177.1 to 202.9 during this period of time. What was your real income in 2001?
Q6) There are several indexes that reflect the overall economic activity in the United States. The federal government puts out an index of leading economic indicators. It includes such diverse economic indicators as stock prices, new orders for plants and equipment, and building permits issued. These indexes are usually referred to as
Page 19
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Chapter 18: Time Series and Forecasting
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Q1) An analysis of past seasonal fluctuations can be helpful in planning production for items such as toys, dolls, Easter eggs, and other holiday-oriented goods.
A)True
B)False
Q2) Even if it is zero, every time series has a ________ component.
Q3) The Durbin-Watson statistic is used to analyze ___________.
A) multicollinearity
B) homoscedasticity
C) autocorrelation
D) variance inflation
Q4) For a straight trend line, ______________ represents the amount of change in for each increase of one unit in t.
Q5) Knowing the seasonal pattern in the form of indexes allows the retailer to deseasonalize sales. This is accomplished by dividing the actual sales for a month by the typical index for that month.
A)True
B)False
Q6) A useful method for eliminating fluctuations in a time series is computing a ______.
Page 20
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Chapter 19: Statistical Process Control and Quality Management
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Q1) A curve that graphs the percent defective versus the probability of accepting that percent defective is referred to as:
A) a percent defective chart.
B) a range chart.
C) an operating characteristic curve or OC curve.
D) a c-bar chart.
Q2) A quality control chart is used to monitor the customer wait time at a local call center. Sample means of five times are averaged and plotted over time. The last five sample means show a trend of increasing sample means. The process is:
A) out of control.
B) in control.
C) improving.
D) showing chance variation.
Q3) Acceptance sampling and control charts may be based on measurements with either ______________ or ___________________.
Q4) The purpose of a statistical control chart that plots sample means is to __________________________.
Q5) A Pareto chart is typically skewed to the ________________.
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Chapter 20: An Introduction to Decision Theory
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Q1) When all the facts are known in a decision-making situation, it can be said that the decision was made under conditions of _____________.
Q2) The manager of Paul's fruit and vegetable store is considering the purchase of a new seedless watermelon from a wholesale distributor. Since this seedless watermelon costs $4, will sell for $7, and is highly perishable, he only expects to sell between six and nine of them. What is the payoff value for the purchase of six watermelons when the demand is for seven or more watermelons?
A) 18
B) 21
C) 28
D) 49
Q3) A way to decide which common stock to purchase is to determine the profit that might be lost because the exact state of nature (the market behavior) was not known at the time the investor bought the stock. This potential loss is called opportunity loss or regret.
A)True
B)False
Q4) In decision theory, an uncertain future outcome is called a
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