Statistical Decision Making Test Bank
Course Introduction
Statistical Decision Making explores the principles and methods used to make informed decisions in the presence of uncertainty. The course covers foundational concepts such as probability theory, statistical inference, hypothesis testing, Bayesian decision theory, risk assessment, and utility functions. Emphasis is placed on formulating real-world problems as statistical decision models, analyzing data to evaluate different strategies, and understanding the trade-offs between alternative choices. Students will apply both classical and modern statistical techniques to case studies from business, engineering, healthcare, and public policy, equipping them with the tools needed to make evidence-based decisions in complex environments.
Recommended Textbook
Business Statistics For Contemporary Decision Making 9th Edition by Ken Black
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19 Chapters
1767 Verified Questions
1767 Flashcards
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Chapter 1: Introduction to Statistics
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94 Flashcards
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Sample Questions
Q1) A portion or subset of the entities under study is called the statistic.
A)True
B)False
Answer: False
Q2) A consumer has been asked to rank five cars based upon their desirability. This level of measurement is _______.
A) interval level
B) ordinal level
C) nominal level
D) ratio level
E) relative level
Answer: B
Q3) The process of summarizing the data is called
A) inferential statistics
B) nominal data
C) descriptive statistics
D) deferential statistics
E) nonparametric statistics
Answer: C
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Page 3
Chapter 2: Charts and Graphs
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92 Flashcards
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Sample Questions
Q1) In a frequency distribution,the first class interval begins at 18.The midpoint of the first class interval is 19.5,and the last class interval ends at 51.How many class intervals are there?
A) 11
B) 17
C) 22
D) 33
E) 34
Answer: A
Q2) A frequency distribution was developed. The lower endpoint of the first class is 9.30,and the midpoint is 9.35. What is the upper endpoint of this class?
A) 9.50
B) 9.60
C) 9.70
D) 9.40
E) 9.80
Answer: D
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Page 4
Chapter 3: Descriptive Statistics
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81 Flashcards
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Sample Questions
Q1) 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
Q2) Jessica Salas,president of Salas Products,is reviewing the warranty policy for her company's new model of automobile batteries. Life tests performed on a sample of 100 batteries indicated: (1)an average life of 75 months,(2)a standard deviation of 5 months,and (3)a bell shaped battery life distribution.Approximately 95% of the batteries will last between ________________.
A) 70 and 80 months
B) 60 and 90 months
C) 65 and 85 months
D) 55 and 95 months
E) 60 and 100 months
Answer: C
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Chapter 4: Probability
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Sample Questions
Q1) The method of assigning probabilities to uncertain outcomes based on laws and rules is called the relative frequency method.
A)True
B)False
Q2) Suppose 5% of the population have a certain disease.A laboratory blood test gives a positive reading for 95% of people who have the disease and 10% positive reading of people who do not have the disease.What is the probability of testing positive?
A) 0.0475
B) 0.1425
C) 0.95
D) 0.9
E) 0.3333
Q3) Given P (A)= 0.45,P (B)= 0.30,P (A \(\cap\) B)= 0.05. Find P (B|A).
A) 0.45
B) 0.135
C) 0.30
D) 0.111
E) 0.167
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6
Chapter 5: Discrete Distributions
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88 Flashcards
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Sample Questions
Q1) If x is a binomial random variable with n=10 and p=0.8,the standard deviation of x is
A) 8.0
B) 1.26
C) 1.60
D) 64.0
E) 10
Q2) A student randomly guesses the answers to a five question true/false test.If there is a 50% chance of guessing correctly on each question,what is the probability that the student misses exactly 1 question?
A) 0.200
B) 0.031
C) 0.156
D) 0.073
E) 0.001
Q3) The Poisson distribution is a continuous distribution which is very useful in solving waiting time problems
A)True
B)False
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Chapter 6: Continuous Distributions
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90 Flashcards
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Sample Questions
Q1) The area under the standard normal distribution between -1 and 1 is twice the area between 0 and 1.
A)True
B)False
Q2) Let z be a normal random variable with mean 0 and standard deviation 1.What is P(z < -2.1)?
A) 0.4821
B) -0.4821
C) 0.9821
D) 0.0179
E) -0.0179
Q3) Suppose the total time to fill a routine prescription at a local pharmacy is 35 minutes based on the time the physician places the order to the time it is dispensed.Assume the standard deviation is 11 minutes. the z-score for x = 46 is ________.
A) 1.0
B) -1.0
C) 11
D) -11
E) .10
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Page 8
Chapter 7: Sampling and Sampling Distributions
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Sample Questions
Q1) If the population proportion is 0.90 and a sample of size 64 is taken,what is the probability that the sample proportion is less than 0.88?
A) 0.2019
B) 0.2981
C) 0.5300
D) 0.7019
E) 0.7899
Q2) The sampling distribution of the sample means is close to the normal distribution only if the distribution of the population is close to normal.
A)True
B)False
Q3) In Norway,approximately 22% of vehicles are electric vehicles.What is the probability of randomly selecting 250 cars and finding out that 60 or more are electric?
A) 0.233
B) 0.223
C) 0.213
D) 0.203
E) 0.193
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Chapter 8: Statistical Inference: Estimation for Single Populations
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Sample Questions
Q1) A researcher wants to estimate the proportion of the population which possesses a given characteristic.A random sample of size 800 is taken resulting in 360 items which possess the characteristic.The point estimate for this population proportion is _______.
A) 0.55
B) 0.45
C) 0.35
D) 0.65
E) 0.70
Q2) Given n = 20,s = 32,and that the population is normally distributed,the 90% confidence interval for the population variance is ________.
A) 645.4458 \(\le\) \(\sigma\) <sup>2</sup> \(\le\) 1923.0986
B) 599.3635 \(\le\) \(\sigma\) <sup>2</sup> \(\le\) 2135.3859
C) 592.2258 \(\le\) \(\sigma\) <sup>2</sup> \(\le\) 2184.4685
D) 652.0129 \(\le\) \(\sigma\) <sup>2</sup> \(\le\) 1887.4185
E) 642.0929 \(\le\) \(\sigma\) <sup>2</sup> \(\le\) 3982.2989
Q3) A t-distribution is similar to a normal distribution,but with flatter tails.
A)True B)False
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Chapter 9: Statistical Inference: Hypothesis Testing for
Single Populations
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Sample Questions
Q1) The first step in testing a hypothesis is to establish a true null hypothesis and a false alternative hypothesis.
A)True
B)False
Q2) The weight of a USB flash drive is 30 grams and is normally distributed. Periodically,quality control inspectors at Dallas Flash Drives randomly select a sample of 17 USB flash drives. If the mean weight of the USB flash drives is too heavy or too light the machinery is shut down for adjustment; otherwise,the production process continues.The last sample showed a mean and standard deviation of 31.9 and 1.8 grams,respectively. Using \(\alpha\) = 0.10,the appropriate decision is _______.
A) reject the null hypothesis and shut down the process
B) reject the null hypothesis and do not shut down the process
C) fail to reject the null hypothesis and shut down the process
D) fail to reject the null hypothesis and do not shut down the process) do nothing
Q3) The probability of committing a Type II error changes for each alternative value of the parameter.
A)True
B)False
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Chapter 10: Statistical Inferences About Two Populations
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Sample Questions
Q1) A researcher believes a new diet should improve weight gain.To test his hypothesis a random sample of 10 people on the old diet and an independent random sample of 10 people on the new diet were selected.The selected people on the old diet gain an average of 5 pounds with a standard deviation of 2 pounds,while the average gain for selected people on the new diet was 8 pounds with a standard deviation of 1.5 pounds.Assume that the values are normally distributed in each population and that the population variances are approximately equal.Using \(\alpha\) = 0.05,the observed t value for this test is _______.
A) -1.96
B) -1.645
C) -2.100
D) -3.79
E) -1.734
Q2) In conducting a matched-pairs hypothesis test,the null and alternative hypotheses always represent one-tailed tests.
A)True
B)False
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Page 12
Chapter 11: A Nalysis of Variance and Design of Experiments
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106 Flashcards
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Sample Questions
Q1) Cindy Ho,VP of Finance at Discrete Components,Inc.(DCI),theorizes that the discount level offered to credit customers affects the average collection period on credit sales. Accordingly,she has designed an experiment to test her theory using four sales discount rates (0%,2%,4%,and 6%). Cindy wants to control for the size of the customer but not to test for it as the main variable of interest so she classified DCI's credit customers into three categories by total assets (small,medium,and large). Then,she randomly assigned four customers from each category to a sales discount rate. Cindy's experimental design is a ________.
A) normalized block design
B) completely randomized design
C) factorial design
D) random block design
E) partially randomized design
Q2) In an experimental design,treatment variables are response variables.
A)True
B)False
Q3) In analysis of variance tests a F distribution forms the basis for making the decisions. A)True
B)False
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Page 13
Chapter 12: Simple Regression Analysis and Correlation
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Sample Questions
Q1) A standard deviation of the error of the regression model is called the _______.
A) coefficient of determination
B) sum of squares of error
C) standard error of the estimate
D) R-squared
E) coefficient of correlation
Q2) A cost accountant is developing a regression model to predict the total cost of producing a batch of printed circuit boards as a linear function of batch size (the number of boards produced in one lot or batch).The intercept of this model is the
A) batch size
B) unit variable cost
C) fixed cost
D) total cost
E) total variable cost
Q3) The variability in the estimated slope is smaller when the x-values are more spread out.
A)True
B)False
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Chapter 13: Multiple Regression Analysis
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Sample Questions
Q1) A real estate appraiser is developing a regression model to predict the market value of single family residential houses as a function of heated area,number of bedrooms,number of bathrooms,age of the house,and central heating (yes,no).The "central heating" variable in this model is _______.
A) a response variable
B) an independent variable
C) a quantitative variable
D) a dependent variable
E) a constant
Q2) Minitab and Excel output for a multiple regression model show the t tests for the regression coefficients but do not provide a t test for the regression constant.
A)True
B)False
Q3) The value of R<sup>2</sup> always goes up when a nontrivial explanatory variable is added to a regression model.
A)True
B)False
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Chapter 14: Building Multiple Regression Models
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Sample Questions
Q1) If a square-transformation is applied to a series of positive numbers,all greater than 1,the numerical values of the numbers in the transformed series will be smaller than the corresponding numbers in the original series.
A)True
B)False
Q2) An "all possible regressions" search of a data set containing 7 independent variables will produce ______ regressions.
A) 13
B) 127
C) 48
D) 64
E) 97
Q3) Stepwise regression is one of the ways to prevent the problem of multicollinearity.
A)True
B)False
Q4) Recoding data cannot improve the fit of a regression model.
A)True
B)False
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Page 16
Chapter 15: Time-Series Forecasting and Index Numbers
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Sample Questions
Q1) If a researcher is using exponential smoothing and determines that the forecast for the next period (F<sub>t + 1</sub>)is the weighted average of the actual value for the previous period (X<sub>t</sub>)and the forecast value for the previous period (F<sub>t</sub>),with weights of 1 and 3 respectively,then = ______.
A) 0.25
B) 0.33
C) 0.67
D) 0.75
E) 0.90
Q2) Naïve forecasting models have no useful applications because they do not take into account data trend,cyclical effects or seasonality.
A)True
B)False
Q3) Forecast error is the difference between the value of the response variable and those of the explanatory variables.
A)True
B)False
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17
Chapter 16: Analysis of Categorical Data
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Sample Questions
Q1) Ophelia O'Brien,VP of Consumer Credit of American First Banks (AFB),monitors the default rate on personal loans at the AFB 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 \(\alpha\) = 0.01,observed chi-square value is _______.
A) 13.38
B) 26.29
C) 2.09
D) 1.05
E) 3.98
Q2) The number of degrees of freedom in a chi-square goodness-of-fit test is the number of categories minus the number of parameters estimated minus one.
A)True
B)False
Q3) In a chi-square goodness-of-fit test,theoretical frequencies are also called expected frequencies.
A)True
B)False
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18
Chapter 17: Nonparametric Statistics
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Sample Questions
Q1) Charles Clayton monitors the daily performance of his investment portfolio by recording a "+" or a "-" sign to indicate whether the portfolio's value increased or decreased from the previous day. His record for the last eighteen business days is "- + + -
+ + + + + + -". The number of runs in this sample is _________.
A) seven
B) six
C) four
D) three
E) one
Q2) The Mann-Whitney U test is implemented differently for small samples than for large samples.
A)True
B)False
Q3) The sampling distribution of R,the number of runs,in the one-sample runs test for randomness of the observations in a large sample is approximately normal if H<sub>0</sub> is true.
A)True
B)False
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19
Chapter 18: Statistical Quality Control
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Sample Questions
Q1) Ophelia O'Brien,VP of Consumer Credit of American First Banks (AFB),is designing a p chart to monitor the default rate on personal loans at the AFB member banks. Her data includes the proportion in default for 30 samples of personal loans.Each sample contains 50 loans,and the average of the 30 proportions is 0.05.The upper control limit for Ophelia's p chart is _____________.
A) 0.0925
B) 0.0500
C) 0.0308
D) 0.1825
E) 0.1425
Q2) Reengineering is ___________________________.
A) a fine-tuning of the present process
B) downsizing of a company
C) another name for Deming's 14 points
D) the complete redesign of core business processes
E) incremental improvement of a core process
Q3) A scatter diagram is a graphical mechanism for examining the relationship between two variables.
A)True
B)False
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Chapter 19: Decision Analysis
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Sample Questions
Q1) The value of sample information is the ratio of the expected monetary value with information to the expected monetary value without information.
A)True
B)False
Q2) In a decision-making under risk scenario,the expected monetary value of a decision alternative is the arithmetic average of the payoffs to the decision alternative in each state of the nature.
A)True
B)False
Q3) In decision-making under uncertainty,a pessimistic approach is the __________.
A) maximin criterion
B) maximax criterion
C) Hurwicz criterion
D) minimax regret strategy
E) maximin regret strategy
Q4) The expected monetary payoff of perfect information is the value of perfect information.
A)True
B)False
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