Business Decision Making
Final Test Solutions
Course Introduction
Business Decision Making explores the processes and tools used by managers to analyze complex situations and make effective organizational decisions. The course covers decision-making models, problem-solving techniques, and the integration of quantitative and qualitative data. Students learn to evaluate alternatives, assess risks, and justify choices using statistical tools and real-world business cases. Emphasis is placed on critical thinking, ethical considerations, and the application of technology to support data-driven decision-making in dynamic business environments.
Recommended Textbook Essentials of Business Statistics 1st Canadian Edition by Ken Black
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Chapter 1: Introduction to Statistics
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Sample Questions
Q1) Rebecca Sear, Marketing Director of a regional restaurant chain, is directing a study to identify and assess the in-dining experience of the customers at one of the restaurants. She directs her staff to design a web-based market survey for distribution to all of the restaurant's 1265 customers who enjoyed a meal during the past 6 months. For this study, the set of 1265 customers is ___.
A) a parameter
B) a sample
C) the population
D) a statistic
E) the frame
Answer: C
Q2) Statistics are used to market vitamins.
A)True
B)False
Answer: True
Q3) A variable is a quantity that describes each of the possible outcomes of an experiment.
A)True
B)False Answer: True
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Chapter 2: Organizing and Visualizing Data
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Sample Questions
Q1) A histogram can be described as a type of vertical bar chart.
A)True
B)False
Answer: True
Q2) If the individual class frequency is divided by the total frequency, the result is the median frequency.
A)True
B)False
Answer: False
Q3) Your company is doing market research to assess the feasibility of a new product. The market research team gathers pricing information of all the existing products that would compete with your company's product. The most expensive brand is priced at $22.95, and the least expensive one at $20.59. If a class width of 0.25 is used, then the number of classes will be
A) 9.
B) 9.4.
C) undetermined, so you can choose either 9 or 10.
D) undetermined, so you must choose another class width.
E) 10.
Answer: E
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Chapter 3: Descriptive Statistics
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Sample Questions
Q1) A measure of how peaked the data is, is called kurtosis.
A)True
B)False
Answer: False
Q2) The number of speeding tickets given by a sample of 14 police officers in a month are as follows: 63, 35, 67, 63, 55, 75, 84, 13, 67, 54, 59, 49, 58, and 67. Compute the range, interquartile range and the standard deviation. Answer: Range = 71, Interquartile range (IQR) = 13, Standard deviation = 17.36
Q3) The number of standard deviations that a value (x) is above or below the mean is the ___.
A) absolute deviation
B) coefficient of variation
C) interquartile range
D) z score
E) correlation coefficient
Answer: D
Q4) Box and whisker plots \(\textbf{ cannot }\)be generated in Excel.
A)True
B)False
Answer: False
Page 5
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Chapter 4: Gathering Data
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Sample Questions
Q1) Which one of the following is a reason for conducting a census instead of taking a sample?
A) The sample can save money.
B) The sample can save time.
C) The population is difficult to access.
D) The safety of the consumer.
E) none of the above
Q2) Alice Zhong is the VP of operations at Pearl Financial Services. She wants to measure customer satisfaction after a new website and other changes were introduced a few months ago. For this purpose, she uses random five-digit numbers from the website random.org (which offers true random numbers on the Internet). This is an example of
A) simple random sample
B) systematic sample
C) convenience sample
D) stratified sample
E) cluster sample
Q3) Systematic sampling is a type of random sampling technique.
A)True
B)False
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Chapter 5: Probability
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Sample Questions
Q1) Which of the following is true regarding probability?
I: Probability is used by most industries.
II: By applying rules and laws one can conduct inferential process under uncertainty.
A) I only
B) II only
C) Both I and II
D) none of the above
Q2) The department in which you work in your company has 24 employees: 10 women and 14 men. A team of 4 employees must be selected to represent the department at a companywide meeting in the headquarters of the company. The team must have two women and two men. How many different teams of 4 can be selected?
A) 12
B) 35
C) 136
D) 2024
E) 4095
Q3) If two events are mutually exclusive, then the two events are also independent.
A)True
B)False
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Chapter 6: Decision Analysis and Expected Value
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Sample Questions
Q1) Dan Hein owns the mineral and drilling rights to a 1,000 acre tract of land. If he drills a well and does \(\textbf{ not }\)strike oil his net loss will be $50,000, but if he drills a well and strikes oil his net gain will be $100,000. If he does\(\textbf{ not }\) drill, his loss is the cost of the mineral and drilling rights, which amount to $1000. For Dan's decision problem, the variable "oil in the tract" is one of the A) payoffs.
B) decision alternatives.
C) states of nature.
D) revised probabilities.
E) prior probabilities.
Q2) The number of visitors to a website each day is an example of a discrete random variable.
A)True
B)False
Q3) In a decision analysis problem, variables (such as general macroeconomic conditions) which are \(\textbf{ not }\) under the decision maker's control are called prior probabilities.
A)True
B)False
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Chapter 7: Discrete Probability Distributions
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Sample Questions
Q1) At A-Life Corporation, managers begin at $35/hour until they reach $50/hour. If the variable x = hourly wage has a discrete uniform distribution, what is the probability that a manager's wage is between $42 and $45?
Q2) During a recent sporting event, a quarter is tossed to determine which team picks the starting side. Suppose the referee says the coin will be tossed 3 times and the best two out of three wins If team A calls 'heads', what is the probability that exactly two heads are observed in three tosses?
A).313
B).375
C).625
D).875
E).500
Q3) The service centre of an automotive dealership expects an average of 4 complaints per day. Assume the number of complaints per day is described by a Poisson distribution,
a) what is the probability of at least 2 complaints?
b) how many complaints would you expect in a 2 day period?
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Chapter 8: Continuous Distributions
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Sample Questions
Q1) If x is continuously uniformly distributed over the interval 8 to 12, inclusively (8 \(\le\) x \(\le\) 12), then the probability, P(9 \(\le\) x \(\le\) 11) is ___.
A) 0.250
B) 0.500
C) 0.333
D) 0.750
E) 1.000
Q2) The normal distribution is an example of ___.
A) a discrete distribution
B) a continuous distribution
C) a bimodal distribution
D) an exponential distribution
E) a binomial distribution
Q3) In a standard normal distribution, if the area under curve to the right of a z-value is 0.10, then the area to the left of the same z-value is -0.10.
A)True
B)False
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Chapter 9: Sampling Distributions
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Sample Questions
Q1) Decreasing the sample size causes the sampling distribution of to ___.
A) shift to the right
B) shift to the left
C) have more dispersion
D) have less dispersion
E) stay unchanged
Q2) Suppose 40% of all college students have a computer at home and a sample of 100 is taken. What is the probability that more than 50 of those in the sample have a computer at home?
A) 0.4793
B) 0.9793
C) 0.0207
D) 0.5207
E) 0.6754
Q3) A sampling distribution is the distribution of a sample statistic such as the sample mean or sample proportion.
A)True
B)False
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Chapter 10: Confidence Intervals
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Sample Questions
Q1) James Desreumaux, VP of Human Resources of American First Banks (AFB), is reviewing the employee training programs of AFB banks. His staff randomly selected personnel files for 100 tellers in the Southeast Region and determined that their mean training time was 25 hours. Assume that the population standard deviation is 5 hours. The 88% confidence interval for the population mean of training times is ___.
A) 17.25 to 32.75
B) 24.23 to 25.78
C) 24.42 to 25.59
D) 19.15 to 30.85
E) 21.00 t0 32.00
Q2) A market researcher computed a confidence interval for a population proportion using a 95% confidence level. Her boss decided that she wanted a 99% confidence level instead. The new interval with 99% confidence level will be wider than the original one with a 95% confidence level.
A)True
B)False
Q3) A t distribution is similar to a normal distribution, but with flatter tails.
A)True
B)False
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Chapter 11: Hypothesis Testing for Single Populations
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Sample Questions
Q1) Ophelia O'Brien, VP of Consumer Credit of Credit First Banks (CFB), monitors the default rate on personal loans at the CFB member banks. One of her standards is "no more than 5% of personal loans should be in default." On each Friday, the default rate is calculated for a sample of 500 personal loans. Last Friday's sample contained 30 defaulted loans. Using \(\alpha\) = 0.10, the test statistic is ___.
A) 1.03
B) -1.03
C) 0.046
D) -0.046
E) 1.33
Q2) If the p value for a hypothesis test is 0.0271, which would be a correct decision?
A) Do not reject the null hypothesis when alpha is 0.10.
B) Do not reject the null hypothesis when alpha is 0.05.
C) Reject the null hypothesis when alpha is 0.025.
D) Reject the null hypothesis when alpha is 0.10.
E) none of the above
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Chapter 12: Hypothesis Testing for Two Populations
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Sample Questions
Q1) A university administrator believes that business students are more likely to be working and going to school than their liberal arts majors. This information may lead to the business school offering courses in the evening hours while the liberal arts college maintains a daytime schedule. To test this theory the proportion of business students who are working at least 20 hours per week is compared to the proportion of liberal arts students who are working at least 20 hours per week. A random sample of 600 from the business school has been taken and it is determined that 480 students work at least 20 hours per week. A random sample of 700 liberal arts students showed that 350 work at least 20 hours per week. The observed z for this is ___.
A) 0.300
B) 0.624
C) 0.638
D) 11.22
E) 13.42
Q2) Hypothesis tests conducted on sets of matched samples are sometimes referred to as correlated t tests.
A)True
B)False
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Chapter 13: Analysis of Variance Anova
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Sample Questions
Q1) In analysis of variance tests a F distribution forms the basis for making the decisions. A)True
B)False
Q2) As director of the employee wellness and productivity program in your company, you are interested in comparing the effects of strength training, aerobic training, and yoga on decreasing rates of injury and absenteeism. The company has 9 divisions with roughly the same number of employees, and you randomly assign 3 divisions to participate in strength training, 3 to aerobic training, and 3 to yoga. Your null hypothesis is ___.
A)
\(\mu\)<sub>1</sub>\(\neq\)\(\mu\)<sub>2</sub>\(\neq\)\(\mu\)<sub>3</sub>
B) \(\mu\)<sub>1</sub> \(\ge\)\(\mu\)<sub>2</sub> \(\ge\) \(\mu\)<sub>3</sub>
C) \(\mu\)<sub>1</sub>\(\le\) \(\mu\)<sub>2</sub> \(\le\)\(\mu\)<sub>3</sub>
D)\(\mu\)<sub>1</sub>=\(\mu\)<sub>2</sub>=\(\mu\)<sub>3</sub>
E) \(\mu\)<sub>1</sub>\(\le\) \(\mu\)<sub>2</sub> \(\ge\)\(\mu\)<sub>3</sub>
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Chapter 14: Linear Correlation and Simple Linear Regression Analysis
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Sample Questions
Q1) The numerical value of the coefficient of correlation must be ___.
A) between -1 and +1
B) between -1 and 0
C) between 0 and 1
D) equal to SSE/(n - 2)
E) between 0 and -1
Q2) In regression, the predictor variable is called the dependent variable.
A)True
B)False
Q3) One of the major uses of residual analysis is to test some of the assumptions underlying regression.
A)True
B)False
Q4) The assumption of constant error variance in regression analysis is called ___.
A) heteroscedasticity
B) homoscedasticity
C) residuals
D) linearity
E) nonnormality
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Chapter 15: Categorical Versus Categorical: Tests
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Sample Questions
Q1) A researcher is interested in using a chi-square test of independence to determine if age is independent of minutes spent reading. Age is divided into four categories while minutes spent reading is classified as high, medium, low. The number of degrees of freedom for this test is 12.
A)True
B)False
Q2) A variable contains five categories. It is expected that data are uniformly distributed across these five categories. To test this, a sample of observed data is gathered on this variable resulting in frequencies of 27, 30, 29, 21, and 24. Using \(\alpha\)=.01, the observed value of chi-square is ___.
A) 12.09
B) 9.82
C) 13.28
D) 17.81
E) 2.09
Q3) In a chi-square goodness-of-fit test, theoretical frequencies are also called expected frequencies.
A)True
B)False
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