QMB Solutions

Business Statistics (Donnelly)
Chapter 14 Correlation and Simple Linear Regression

1) A dependent variable, x, explains the variation in another variable, which is called the
independent
variable, y.
Answer: FALSE
Diff: 1
Keywords: independent variable, dependent variable
Objective: 14.1.1
2) Consider the relationship between the following variables:
Household income
Square footage of the primary residence
Household income would be considered the independent variable.
Answer: TRUE
Diff: 1
Objective: 14.1.1
3) Consider the relationship between the following variables:
Monthly electricity bill for a household during the summer
Average high ambient temperature during the summer months
Average high ambient temperature during the summer months would be considered the
dependent variable.
Answer: FALSE
Diff: 1
Objective: 14.1.1
4) A scatter plot is a useful tool to examine the data before conducting correlation analysis.
Answer: TRUE
Diff: 1
Keywords: correlation analysis, scatter plot
Objective: 14.1.1
5) A relationship is linear if the scatter plot of the independent and dependent variables has a
straight-line pattern.
Answer: TRUE
Diff: 1
Keywords: linear relationship, scatter plot
Objective: 14.2.1
14-1
Copyright 2015 Pearson Education, Inc.
Correlation and Simple Linear Regression 14-2

6) The correlation coefficient is a measure of the slope of the scatter plot for the independent and
dependent variables.
Answer: FALSE
Diff: 1
Keywords: correlation coefficient
Objective: 14.2.1
7) A correlation coefficient of -0.80 is an indication of a weak negative relationship between two
variables.
Answer: FALSE
Diff: 1
Objective: 14.2.1
8) The values of the correlation coefficient range between -1.0 and +1.0.
Answer: TRUE
Diff: 1
Objective: 14.2.1
9) If two variables have a correlation coefficient equal to +0.75, the scatter plot will have an
upward slope moving from left to right.
Answer: TRUE
Diff: 1
Objective: 14.2.1
10) If two variables have a correlation coefficient equal to +0.70 from a sample size of 9, we can
conclude that the population correlation coefficient is greater than zero using = 0.05.
Answer: TRUE
Diff: 1
Objective: 14.2.2
11) If two variables have a correlation coefficient equal to -0.60 from a sample size of 5, we can
conclude that the population correlation coefficient is less than zero using = 0.05.
Answer: FALSE
Diff: 1
Objective: 14.2.2
12) The values of the coefficient of determination range between -1.0 and +1.0.
Answer: FALSE
Diff: 1
Objective: 14.3.2

13) An ordered pair is a set of x and y values that pertain to a specific observation.
Answer: TRUE
Diff: 1
Keywords: ordered pair
Objective: 14.3.1
14) If the slope of the simple regression equation is equal to zero, the scatter plot for the ordered
pairs will be a vertical straight line indicating that there is no relationship between the
independent and dependent variables.
Answer: FALSE
Diff: 2
Keywords: slope, scatter plot
Objective: 14.3.1
15) The difference between the actual data value and the dependent variable is known as the
residual.
Answer: FALSE
Diff: 1
Keywords: residual
Objective: 14.3.1
16) The least squares method is a mathematical procedure used to identify the linear equation
that best fits a set of ordered pairs.
Answer: TRUE
Diff: 1
Keywords: least squares method
Objective: 14.3.1
17) The line that best fits the ordered pairs using the least squares method is called the residual
line.
Answer: FALSE
Diff: 1
Keywords: regression line
Objective: 14.3.1
18) The slope value for a regression equation represents the average change in the dependent
variable for a one-unit increase in the independent variable.
Answer: TRUE
Diff: 1
Keywords: slope, independent variable, dependent variable
Objective: 14.3.1
$
y 15.6 3.8 x
19) Given a regression equation of
, a one-unit increase in the independent
variable would result in an average increase of 3.8 for the dependent variable.
Answer: FALSE
Diff: 1
Keywords: slope, independent variable, dependent variable
Objective: 14.3.1
20) The total sum of squares can never be negative.
Answer: TRUE
Diff: 1
Keywords: total sum of squares
Objective: 14.3.1
21) The correlation coefficient measures the percentage of the total variation of the dependent
variable that is explained by the independent variable from a sample.
Answer: FALSE
Diff: 1
Keywords: coefficient of determination
Objective: 14.3.2
22) A coefficient of determination equal to zero indicates that there is no relationship between the
Answer: TRUE
Diff: 1
Objective: 14.3.2
23) The hypothesis test for the population coefficient of determination can be a one-tail test or a
two-tail test.
Answer: FALSE
Diff: 1
Objective: 14.3.2
24) The hypothesis tests for the correlation coefficient, and the coefficient of determination will
always produce the same conclusions.
Answer: TRUE
Diff: 1
Keywords: coefficient of determination, correlation coefficient
Objective: 14.3.2

25) The widest confidence interval for an average value of y based on a value of x will occur at
the average value for x.
Answer: FALSE
Diff: 2
Keywords: confidence interval for an average value of y
Objective: 14.4.1
26) A horizontal slope on an xy scatter plot indicates that there is a strong relationship between
the between the independent and dependent variables.
Answer: FALSE
Diff: 1
Keywords: slope, scatter plot
Objective: 14.5.1
27) A 95% confidence interval will always be wider than a 95% prediction interval using the
same value of x.
Answer: FALSE
Diff: 2
Keywords: confidence interval for an average value of y, prediction interval for a specific value
of x
Objective: 14.4.1
28) A smaller standard error of the slope increases the likelihood that we can establish a
significant relationship between the independent and dependent variables.
Answer: TRUE
Diff: 1
Keywords: standard error of the slope
Objective: 14.5.1
29) When the slope of a population regression line equals zero, we conclude that there is a linear
relationship between the dependent and independent variables.
Answer: FALSE
Diff: 1
Keywords: slope
Objective: 14.5.1
30) When the p-value for testing the significance of the regression slope is less than alpha, we
conclude that there is a significant relationship between the dependent and independent
variables.
Answer: TRUE
Diff: 1
Keywords: p-value
Objective: 14.5.1

31) If the confidence interval for the regression slope includes zero, we would have some
evidence that could be equal to zero, which would indicate that there may not be a relationship
between the dependent and independent variables.
Answer: TRUE
Diff: 1
Keywords: confidence interval for the regression slope
Objective: 14.5.2
32) An assumption of regression analysis is that the relationship between the independent and
dependent variables is linear.
Answer: TRUE
Diff: 1
Keywords: assumption of regression analysis
Objective: 14.6.1
33) An assumption of a regression analysis is that the residuals exhibit no patterns across values
for the dependent variable.
Answer: FALSE
Diff: 1
Objective: 14.6.1
34) Using the regression equation to predict values for the dependent variable beyond the range
of the data may provide results that are unreliable.
Answer: TRUE
Diff: 1
Objective: 14.6.1
35) When the relationship between the variables is statistically significant using simple
regression analysis, we have enough evidence to state that the independent variable caused the
change in the dependent variable.
Answer: FALSE
Diff: 1
Objective: 14.6.1

36) The ________ indicates both the strength and direction of the linear relationship between the
A) regression intercept
B) regression slope
C) coefficient of determination
D) correlation coefficient
Answer: D
Diff: 1
Objective: 14.6.1
37) A correlation analysis requires that the data be either ________ data or _______ data.
A) nominal, ratio
B) interval, ratio
C) ordinal, interval
D) nominal, interval
Answer: B
Diff: 1
Keywords: correlation analysis, interval data, ratio data
Objective: 14.2.1
38) Two variables have a correlation coefficient equal to +0.55 from a sample size of 8. Which
one of the following statements describes the results of the hypothesis test that the population
correlation coefficient is greater than zero using = 0.05?
A) Because the test statistic is greater than the critical value, we fail to reject the null hypothesis
and conclude that the population correlation coefficient is not greater than zero.
B) Because the test statistic is greater than the critical value, we can reject the null hypothesis
and conclude that the population correlation coefficient is greater than zero.
C) Because the test statistic is less than the critical value, we fail to reject the null hypothesis and
conclude that the population correlation coefficient is not greater than zero.
D) Because the test statistic is less than the critical value, we can reject the null hypothesis and
Answer: C
Diff: 1
Objective: 14.2.2

39) Two variables have a correlation coefficient equal to -0.65 from a sample size of 10. Which
one of the following statements describes the results of the hypothesis test that the population
correlation coefficient is less than zero using = 0.05?
A) Because the test statistic is less than the critical value, we can reject the null hypothesis and
conclude that the population correlation coefficient is less than zero.
B) Because the test statistic is less than the critical value, we can reject the null hypothesis and
conclude that the population correlation coefficient is not less than zero.
C) Because the test statistic is greater than the critical value, we can reject the null hypothesis
and conclude that the population correlation coefficient is less than zero.
D) Because the test statistic is greater than the critical value, we fail to reject the null hypothesis
and conclude that the population correlation coefficient is not less than zero.
Answer: A
Diff: 1
Objective: 14.2.2
40) The ________ is used to test the significance of the population correlation coefficient.
A) normal distribution
B) Student's t-distribution
C) F-distribution
D) chi-square distribution
Answer: B
Diff: 1
Keywords: correlation coefficient, Student's t-distribution
Objective: 14.2.2
41) The technique of ________ enables us to describe a straight line that best fits a series of
ordered pairs (x,y).
A) analysis of variance
B) correlation analysis
C) simple regression analysis
D) hypothesis testing
Answer: C
Diff: 1
Keywords: simple regression analysis
Objective: 14.3.1

$
y b0 b1 x
42) The formula for the equation describing a straight line is
equation represents the _______________________________.
A) predicted value of y given a value of x
B) independent variable
C) y-intercept of the straight line
D) slope of the straight line
Answer: D
Diff: 1
Keywords: slope
Objective: 14.3.1
. The value for b in this
$
y b0 b1 x
43) The formula for the equation describing a straight line is
equation represents the ________________________________.
A) predicted value of y given a value of x
B) independent variable
C) y-intercept of the straight line
D) slope of the straight line
Answer: C
Diff: 1
Keywords: y-intercept
Objective: 14.3.1
. The value for a in this
44) The least squares method will minimize the sum of squares _______ when describing the
equation that best fits the ordered pairs.
A) error
B) regression
C) between
D) within
Answer: A
Diff: 2
Keywords: sum of squares error
Objective: 14.3.1
45) The ________ measures the total variation in the dependent variable in simple regression
analysis.
A) sum of squares within
B) sum of squares error
C) sum of squares regression
D) total sum of squares
Answer: D
Diff: 1
Objective: 14.3.1
46) The ________ measures the variation in the dependent variable that is explained by variables
other than the independent variable in simple regression analysis.
Answer: B
Diff: 1
Objective: 14.3.1
47) The ________ measures the variation in the dependent variable that is explained by the
independent variable in simple regression analysis.
Answer: C
Diff: 1
Keywords: sum of squares regression
Objective: 14.3.1
48) The ________ is used to test the significance of the population coefficient of determination.
A) normal distribution
B) Student's t-distribution
C) F-distribution
D) chi-square distribution
Answer: C
Diff: 1
Keywords: correlation coefficient, F-distribution
Objective: 14.3.2
49) The ________ measures the amount of dispersion of observed data around a
regression line.
A) correlation coefficient
B) coefficient of determination
C) standard error of the slope
D) standard error of the estimate
Answer: D
Diff: 1
Keywords: standard error of the estimate
Objective: 14.4.1
50) The ________ measures how consistent the slope of the regression equation would
be if several sets of samples from the population were selected and the regression
equation were derived for each of them.
A) correlation coefficient
B) coefficient of determination
C) standard error of the slope
D) standard error of the estimate
Answer: C
Diff: 1
Objective: 14.5.1
51) An assumption of regression analysis is homoscedasticity, which states that the
A) variation of the dependent variable is the same across all values for the independent variable.
B) residuals exhibit no patterns across values for the independent variable.
C) residuals exhibit no patterns across values for the dependent variable.
D) relationship between the independent and dependent variables is linear.
Answer: A
Diff: 1
Keywords: assumption of regression analysis, homoscedasticity
Objective: 14.6.1
52) The table below shows the number of cars sold last month by seven employees at Concord
Motors and their number of years of sales experience.
Experience
1
2
2
4
5
6
8
Sales
8
6
7
14
9
13
10
The correlation coefficient for this data is ________.

A) -0.251
B) 0.360
C) 0.553
D) 0.744
Answer: C
Diff: 2
Objective: 14.2.1
Experience
1
2
2
4
5
6
8
Sales
8
6
7
14
9
13
10
The test statistic for testing whether the population correlation coefficient is greater than zero is
________.
A) 1.48
B) 2.25
C) 3.09
D) 3.71
Answer: A
Diff: 1
Objective: 14.2.2
Experience
1
2
2
4
5
6
8
Sales
8
6
7
14
9
13
10
Which one of the following statements describes the results of the hypothesis test that the
population correlation coefficient is greater than zero using = 0.05?
A) Because the test statistic is greater than the critical value, we can reject the null hypothesis
B) Because the test statistic is greater than the critical value, we fail to reject the null hypothesis
C) Because the test statistic is less than the critical value, we can reject the null hypothesis and
conclude that the population correlation coefficient is greater than zero.
D) Because the test statistic is less than the critical value, we fail to reject the null hypothesis and
Answer: D
Diff: 2
Objective: 14.2.2
Experience
1
2
2
4
5
6
8
Sales
8
6
7
14
9
13
10
Management would like to use simple regression analysis to estimate monthly car sales using the
number of years of sales experience. The slope for the regression equation is ________.
A) 0.563
B) 0.658
C) 1.215
D) 2.450
Answer: B
Diff: 2
Keywords: slope
Objective: 14.3.1
Experience
1
2
2
4
5
6
8
Sales
8
6
7
14
9
13
10
number of years of sales experience. The y-intercept for the regression equation is ________.
A) 2.165
B) 4.598
C) 6.940
D) 8.337
Answer: C
Diff: 2

Objective: 14.3.1
Experience
1
2
2
4
5
6
8
Sales
8
6
7
14
9
13
10
number of years of sales experience. The average monthly sales for an employee with five years
of sales experience is ________.
A) 8.50
B) 10.23
C) 12.01
D) 14.62
Answer: B
Diff: 1
Keywords: regression equation
Objective: 14.3.1
Experience
1
2
2
4
5
6
8
Sales
8
6
7
14
9
13
10
number of years of sales experience. The total sum of squares for this sample is ________.
A) 53.71
B) 63.33
C) 70.83
D) 83.50
Answer: A
Diff: 1
Objective: 14.3.1
Experience
1
2
2
4
5
6
8
Sales
8
6
7
14
9
13
10
number of years of sales experience. The sum of squares error for this sample is ________.
A) 13.50
B) 16.00
C) 29.61
D) 37.23
Answer: D
Diff: 1

Objective: 14.3.1
Experience
1
2
2
4
5
6
8
Sales
8
6
7
14
9
13
10
number of years of sales experience. The sum of squares regression for this sample is ________.
A) 9.72
B) 13.33
C) 16.48
D) 26.94
Answer: C
Diff: 1
Objective: 14.3.1
Experience
1
2
2
4
5
6
8
Sales
8
6
7
14
9
13
10
number of years of sales experience. The coefficient of determination for this sample is
________.
A) 0.307
B) 0.419
C) 0.567
D) 0.612
Answer: A
Diff: 1
Objective: 14.3.2
Experience
1
2
2
4
5
6
8
Sales
8
6
7
14
9
13
10
number of years of sales experience. The test statistic for testing the hypothesis that the
population coefficient of determination is greater than zero is ________.
A) 2.21
B) 4.37
C) 7.92
D) 10.16
Answer: A
Diff: 1
Objective: 14.3.2
Experience
1
2
2
4
5
6
8
Sales
8
6
7
14
9
13
10
number of years of sales experience. Which one of the following statements describes the results
of the hypothesis test that the population correlation coefficient is greater than zero using =
0.05?
Answer: C
Diff: 2
Objective: 14.3.2
Experience
1
2
2
4
5
6
8
Sales
8
6
7
14
9
13
10
number of years of sales experience. The standard error of the estimate is ________.
A) 1.64
B) 2.73
C) 4.60
D) 5.11
Answer: B
Diff: 1
Objective: 14.4.1
Experience
1
2
2
4
5
6
8
Sales
8
6
7
14
9
13
10
number of years of sales experience. The 95% confidence interval that estimates the average
monthly sales for an employee with 5 years of experience is ________.
A) (7.34, 13.12)
B) (9.23, 11.23)
C) (5.73, 14.73)
D) (5.03, 15.43)
Answer: A
Diff: 2
Keywords: confidence interval for an average for of y
Objective: 14.4.1

Experience
1
2
2
4
5
6
8
Sales
8
6
7
14
9
13
10
number of years of sales experience. The 95% prediction interval that estimates the monthly
sales for an employee with 5 years of experience is ________.
A) (7.72, 12.73)
B) (5.79, 14.73)
C) (4.23, 16.23)
D) (2.64, 17.82)
Answer: D
Diff: 2
Keywords: prediction interval for specific for of y
Objective: 14.4.2

Experience
1
2
2
4
5
6
8
Sales
8
6
7
14
9
13
10
number of years of sales experience. The standard error of the slope is ________.
A) 0.1588
B) 0.2102
C) 0.4429
D) 0.5182
Answer: C
Diff: 1
Objective: 14.5.1

Experience
1
2
2
4
5
6
8
Sales
8
6
7
14
9
13
10
number of years of sales experience. The test statistic for testing that the population slope is not
equal to zero is ________.
A) 1.49
B) 2.65
C) 3.22
D) 3.86
Answer: A
Diff: 1
Keywords: test statistic for regression slope
Objective: 14.5.1

Experience
1
2
2
4
5
6
8
Sales
8
6
7
14
9
13
10
number of years of sales experience. Which one of the following statements describes the results
of the hypothesis test that the population slope is not equal to zero using = 0.05?
A) Because the absolute value of the test statistic is less than the absolute value of the critical
value, we fail to reject the null hypothesis and cannot conclude that the population slope is not
equal to zero.
B) Because the absolute value of the test statistic is less than the absolute value of the critical
value, we can reject the null hypothesis and conclude that the population slope is equal to zero.
C) Because the absolute value of the test statistic is greater than the absolute value of the critical
value, we can reject the null hypothesis and conclude that the population slope is not equal to
zero.
D) Because the absolute value of the test statistic is greater than the absolute value of the critical
value, we fail to reject the null hypothesis and conclude that the population slope is equal to zero.
Answer: A
Diff: 2
Keywords: hypothesis test for regression slope
Objective: 14.5.1

Experience
1
2
2
4
5
6
8
Sales
8
6
7
14
9
13
10
number of years of sales experience. The 95% confidence interval for the regression slope is
________.
A) (1.842, 3.158
B) (0.481, 1.797)
C) (0.058, 1.258)
D) (0.408, 0.908)
Answer: B
Diff: 1
Objective: 14.5.2
71) Costco sells paperback books in their retail stores and wanted to examine the relationship
between price and demand. The price of a particular novel was adjusted each week and the
weekly sales were recorded in the table below.
Sales
3
4
6
10
8
10
Price
$12
$11
$10
$9
$8
$7

A) 0.402
B) 0.623
C) 0.910
D) 0.197
Answer: C
Diff: 2
Objective: 14.2.1

Sales
3
4
6
10
8
10
Price
$12
$11
$10
$9
$8
$7
The test statistic for testing whether the population correlation coefficient is less than zero is
________.
A) 3.07
B) 4.39
C) 6.24
D) 4.40
Answer: B
Diff: 2
Objective: 14.2.2

Sales
3
4
6
10
8
10
Price
$12
$11
$10
$9
$8
$7
population correlation coefficient is less than zero using = 0.05?
A) Because the test statistic is less than the critical value, we fail to reject the null hypothesis and
B) Because the test statistic is less than the critical value, we can reject the null hypothesis and
C) Because the test statistic is greater than the critical value, we can reject the null hypothesis
and conclude that the population correlation coefficient is less than zero.
D) Because the test statistic is greater than the critical value, we fail to reject the null hypothesis
and conclude that the population correlation coefficient is not less than zero.
Answer: B
Diff: 2
Objective: 14.2.2

Sales
3
4
6
10
8
10
Price
$12
$11
$10
$9
$8
$7
Management would like to use simple regression analysis to estimate weekly demand for this
novel using the price of the novel. The slope for the regression equation is ________.
A) 0.584
B) 0.675
C) 0.920
D) 1.457
Answer: D
Diff: 2
Keywords: slope
Objective: 14.3.1

Sales
3
4
6
10
8
10
Price
$12
$11
$10
$9
$8
$7
novel using the price of the novel. The y-intercept for the regression equation is ________.
A) 20.676
B) 25.155
C) 29.601
D) 32.772
Answer: A
Diff: 2
Objective: 14.3.1

Sales
3
4
6
10
8
10
Price
$12
$11
$10
$9
$8
$7
novel using the price of the novel. The average weekly sales for the novel when priced at $9 is
________.
A) 4.70
B) 5.32
C) 6.22
D) 7.56
Answer: D
Diff: 1
Objective: 14.3.1

Sales
3
4
6
10
8
10
Price
$12
$11
$10
$9
$8
$7
novel using the price of the novel. The total sum of squares for this sample is ________.
A) 20.75
B) 35.60
C) 44.83
D) 53.51
Answer: C
Diff: 1
Objective: 14.3.1
Sales
3
4
6
10
8
10
Price
$12
$11
$10
$9
$8
$7
novel using the price of the novel. The sum of squares error for this sample is ________.
A) 7.63
B) 9.24
C) 11.31
D) 14.30
Answer: A
Diff: 1
Objective: 14.3.1

Sales
3
4
6
10
8
10
Price
$12
$11
$10
$9
$8
$7
novel using the price of the novel. The sum of squares regression for this sample is ________.
A) 24.17
B) 37.20
C) 40.16
D) 46.25
Answer: B
Diff: 1
Objective: 14.3.1
Sales
3
4
6
10
8
10
Price
$12
$11
$10
$9
$8
$7
novel using the price of the novel. The coefficient of determination for this sample is ________.
A) 0.336
B) 0.624
C) 0.830
D) 0.881
Answer: C
Diff: 1
Objective: 14.3.2

Sales
3
4
6
10
8
10
Price
$12
$11
$10
$9
$8
$7
novel using the price of the novel. The test statistic for testing the hypothesis that the population
coefficient of determination is greater than zero is ________.
A) 5.60
B) 8.66
C) 12.18
D) 19.50
Answer: D
Diff: 1
Objective: 14.3.2

Sales
3
4
6
10
8
10
Price
$12
$11
$10
$9
$8
$7
novel using the price of the novel. Which one of the following statements describes the results of
the hypothesis test that the population correlation coefficient is greater than zero using = 0.05?
conclude that the population correlation coefficient is greater than zero.
D) Because the test statistic is less than the critical value, we fail to reject the null hypothesis and
Answer: A
Diff: 2
Objective: 14.3.2

Sales
3
4
6
10
8
10
Price
$12
$11
$10
$9
$8
$7
novel using the price of the novel. The standard error of the estimate is ________.
A) 1.09
B) 1.38
C) 1.76
D) 3.30
Answer: B
Diff: 1
Objective: 14.4.1

Sales
3
4
6
10
8
10
Price
$12
$11
$10
$9
$8
$7
novel using the price of the novel. The 95% confidence interval that estimates the average
weekly sales for a price of $9 is ________.
A) (1.96, 13.16)
B) (7.26, 7.86)
C) (5.93, 9.19)
D) (1.26, 13.86)
Answer: C
Diff: 2
Objective: 14.4.1

Sales
3
4
6
10
8
10
Price
$12
$11
$10
$9
$8
$7
novel using the price of the novel. The 95% prediction interval that estimates the weekly sales
for a price of $9 is ________.
A) (1.26, 13.86)
B) (3.39, 11.74)
C) (5.06, 10.06)
D) (6.36, 8.76)
Answer: B
Diff: 2
Objective: 14.4.2

Sales
3
4
6
10
8
10
Price
$12
$11
$10
$9
$8
$7
novel using the price of the novel. The standard error of the slope is ________.
A) 0.3299
B) 0.5817
C) 0.6810
D) 0.8122
Answer: A
Diff: 1
Objective: 14.5.1

Sales
3
4
6
10
8
10
Price
$12
$11
$10
$9
$8
$7
novel using the price of the novel. The test statistic for testing that the population slope is not
equal to zero is ________.
A) 1.44
B) 1.17
C) 2.65
D) 4.42
Answer: D
Diff: 1
Objective: 14.5.1

Sales
3
4
6
10
8
10
Price
$12
$11
$10
$9
$8
$7
novel using the price of the novel. Which one of the following statements describes the results of
the hypothesis test that the population slope is not equal to zero using = 0.05?
value, we fail to reject the null hypothesis and cannot conclude that the population slope is equal
to zero.
zero.
Answer: C
Diff: 2
Objective: 14.5.1

Sales
3
4
6
10
8
10
Price
$12
$11
$10
$9
$8
$7
novel using the price of the novel. The 95% confidence interval for the regression slope is
________.
A) (3.957, 1.043)
B) (2.373, 0.541)
C) (1.857, 1.057)
D) (6.057, 3.143)
Answer: B
Diff: 1
Objective: 14.5.2

90) Sarah is the office manager for a group of financial advisors who provide financial services
for individual clients. She would like to investigate whether a relationship exists between the
number of presentations made to prospective clients in a month and the number of new clients
per month. The following table shows the number of presentations and corresponding new
clients for a random sample of six employees.
Employee
1
2
3
4
5
6
Presentations
7
9
9
10
11
12
New Clients
2
3
4
3
5
3

A) 0.167
B) 0.323
C) 0.403
D) 0.516
Answer: D
Diff: 2
Objective: 14.2.1

Employee
1
2
3
4
5
6
Presentations
7
9
9
10
11
12
New Clients
2
3
4
3
5
3
The test statistic for testing whether the population correlation coefficient is not equal to zero is
________.
A) 0.84
B) 1.20
C) 1.77
D) 2.36
Answer: B
Diff: 2
Objective: 14.2.2

Employee
1
2
3
4
5
6
Presentations
7
9
9
10
11
12
New Clients
2
3
4
3
5
3
population correlation coefficient is not equal to zero using = 0.10?
value, we fail to reject the null hypothesis and cannot conclude that the population correlation
coefficient is equal to zero.
value, we can reject the null hypothesis and conclude that the population correlation coefficient
is equal to zero.
value, we reject the null hypothesis and cannot conclude that the population correlation
value, we fail to reject the null hypothesis and conclude that the population correlation
Answer: A
Diff: 2
Objective: 14.2.2

Employee
1
2
3
4
5
6
Presentations
7
9
9
10
11
12
New Clients
2
3
4
3
5
3
Sarah would like to use simple regression analysis to estimate the number of new clients per
month based on the number of presentations made by the employee per month. The slope for the
regression equation is ________.
A) 0.1553
B) 0.3043
C) 0.5987
D) 0.8750
Answer: B
Diff: 2
Keywords: slope
Objective: 14.3.1

Employee
1
2
3
4
5
6
Presentations
7
9
9
10
11
12
New Clients
2
3
4
3
5
3
month based on the number of presentations made by the employee per month. The y-intercept
for the regression equation is ________.
A) 0.3913
B) 2.4510
C) 4.9825
D) 6.7500
Answer: A
Diff: 2
Objective: 14.3.1

Employee
1
2
3
4
5
6
Presentations
7
9
9
10
11
12
New Clients
2
3
4
3
5
3
month based on the number of presentations made by the employee per month. The average
number of new clients per month for an employee who made 10 presentations per month is
________.
A) 1.67
B) 2.39
C) 3.05
D) 3.43
Answer: D
Diff: 1
Objective: 14.3.1

Employee
1
2
3
4
5
6
Presentations
7
9
9
10
11
12
New Clients
2
3
4
3
5
3
month based on the number of presentations made by the employee per month. The total sum of
squares for this sample is ________.
A) 5.33
B) 8.745
C) 15.33
D) 19.60
Answer: A
Diff: 1
Objective: 14.3.1

Employee
1
2
3
4
5
6
Presentations
7
9
9
10
11
12
New Clients
2
3
4
3
5
3
month based on the number of presentations made by the employee per month. The sum of
squares error for this sample is ________.
A) 2.26
B) 3.06
C) 3.91
D) 11.25
Answer: C
Diff: 1
Objective: 14.3.1

Employee
1
2
3
4
5
6
Presentations
7
9
9
10
11
12
New Clients
2
3
4
3
5
3
month based on the number of presentations made by the employee per month. The sum of
squares regression for this sample is ________.
A) 1.01
B) 1.42
C) 2.97
D) 4.08
Answer: B
Diff: 1
Objective: 14.3.1

Employee
1
2
3
4
5
6
Presentations
7
9
9
10
11
12
New Clients
2
3
4
3
5
3
month based on the number of presentations made by the employee per month. The coefficient of
determination for this sample is ________.
A) 0.266
B) 0.457
C) 0.632
D) 0.743
Answer: A
Diff: 1
Objective: 14.3.2

Employee
1
2
3
4
5
6
Presentations
7
9
9
10
11
12
New Clients
2
3
4
3
5
3
month based on the number of presentations made by the employee per month. The test statistic
for testing the hypothesis that the population coefficient of determination is greater than zero is
________.
A) -1.16
B) 0.35
C) 1.03
D) 1.45
Answer: D
Diff: 1
Objective: 14.3.2

Employee
1
2
3
4
5
6
Presentations
7
9
9
10
11
12
New Clients
2
3
4
3
5
3
month based on the number of presentations made by the employee per month. Which one of the
following statements describes the results of the hypothesis test that the population correlation
coefficient is greater than zero using = 0.10?
cannot conclude that the population correlation coefficient is greater than zero.
Answer: C
Diff: 2
Objective: 14.3.2

Employee
1
2
3
4
5
6
Presentations
7
9
9
10
11
12
New Clients
2
3
4
3
5
3
month based on the number of presentations made by the employee per month. The standard
error of the estimate is ________.
A) 0.99
B) 1.66
C) 2.18
D) 2.95
Answer: A
Diff: 1
Objective: 14.4.1

Employee
1
2
3
4
5
6
Presentations
7
9
9
10
11
12
New Clients
2
3
4
3
5
3
month based on the number of presentations made by the employee per month. The 90%
confidence interval that estimates the average number of new clients per month for an employee
who makes nine presentations per month is ________.
A) (2.90, 3.97)
B) (2.56, 4.31)
C) (2.20, 4.06)
D) (1.91, 4.96)
Answer: C
Diff: 2
Objective: 14.4.1

Employee
1
2
3
4
5
6
Presentations
7
9
9
10
11
12
New Clients
2
3
4
3
5
3
prediction interval that estimates the number of new clients per month for an employee who
makes nine presentations per month is ________.
A) (2.90, 3.97)
B) (1.83, 5.04)
C) (0.82, 5.44)
D) (0.00, 6.86)
Answer: C
Diff: 2
Objective: 14.4.2

Employee
1
2
3
4
5
6
Presentations
7
9
9
10
11
12
New Clients
2
3
4
3
5
3
month based on the number of presentations made by the employee per month. The standard
error of the slope is ________.
A) 0.2527
B) 0.4622
C) 0.5720
D) 0.6155
Answer: A
Diff: 1
Objective: 14.5.1

Employee
1
2
3
4
5
6
Presentations
7
9
9
10
11
12
New Clients
2
3
4
3
5
3
month based on the number of presentations made by the employee per month. The test statistic
for testing that the population slope is not equal to zero is ________.
A) -0.89
B) 0.64
C) 1.20
D) 3.19
Answer: C
Diff: 1
Objective: 14.5.1

Employee
1
2
3
4
5
6
Presentations
7
9
9
10
11
12
New Clients
2
3
4
3
5
3
month based on the number of presentations made by the employee per month. Which one of the
following statements describes the results of the hypothesis test that the population slope is not
equal to zero using = 0.05?
value, we fail to reject the null hypothesis and cannot conclude that the population slope is not
equal to zero.
zero.
Answer: A
Diff: 2
Objective: 14.5.1

Employee
1
2
3
4
5
6
Presentations
7
9
9
10
11
12
New Clients
2
3
4
3
5
3
confidence interval for the regression slope is ________.
A) (0.178, 0.431)
B) (0.052, 0.557)
C) (-0.100, 0.709)
D) (-0.235, 0.843)
Answer: D
Diff: 1
Objective: 14.5.2

Use the information below to answer the following question(s).
Cars.com would like to use simple regression to predict the selling price of a used car, in
thousands of dollars, based on the age of the car in years. A random sample of used cars was
selected and the result of the regression analysis is shown below.
109) The size of the sample is ________.

A) 5
B) 6
C) 7
D) 8
Answer: C
Diff: 1
Keywords: using Excel for simple regression
Objective: 14.3.1
110) According to these regression results, the average selling price for a 7-year old car is
________.
A) $8,138
B) $9,663
C) $10,150
D) $11,435
Answer: A
Diff: 1
Objective: 14.3.1

111) The percentage of the variation in selling price that is explained by the age of the used car is
________.
A) 43.12
B) 54.61
C) 62.17
D) 78.85
Answer: D
Diff: 1
Objective: 14.3.2
112) Which one of the following statements is true using = 0.05?
A) Because the p-value for the slope is 0.0002, we can reject the null hypothesis and conclude
that there is a relationship between the age and selling price of a used car.
B) Because the p-value for the slope is 0.0002, we fail to reject the null hypothesis and conclude
C) Because the p-value for the slope is 0.0351, we can reject the null hypothesis and conclude
D) Because the p-value for the slope is 0.0351, we can reject the null hypothesis and conclude
that there is no relationship between the age and selling price of a used car.
Answer: C
Diff: 2
Objective: 14.5.1
A) Because the 95% confidence interval for the population slope includes zero, we can reject the
null hypothesis and conclude that there is a relationship between the age and selling price of a
used car.
B) Because the 95% confidence interval for the population slope includes zero, we fail to reject
the null hypothesis and conclude that there is a relationship between the age and selling price of
a used car.
C) Because the 95% confidence interval for the population slope does not include zero, we fail to
reject the null hypothesis and conclude that there is a relationship between the age and selling
price of a used car.
D) Because the 95% confidence interval for the population slope does not include zero, we can
reject the null hypothesis and conclude that there is a relationship between the age and selling
price of a used car.
Answer: D
Diff: 2
Keywords: confidence interval for the population slope
Objective: 14.5.2

Cape May Realty manages rental beach properties during the summer season for property
owners. They would like to determine if a relationship exists between the square footage of
beach property and the weekly rental rates during the summer season. Simple regression analysis
was performed using a random sample of beach properties with the results shown below.

A) 10
B) 12
C) 13
D) 14
Answer: D
Diff: 1
Objective: 14.3.1
115) According to these regression results, the average weekly rental for a property that is 2,000
square feet is ________.
A) $1,219
B) $1,473
C) $1,598
D) $1,750
Answer: B
Diff: 1
Objective: 14.3.1

116) The percentage of the variation in weekly rental that is explained by the square footage of
the property is ________.
A) 15.99
B) 22.45
C) 47.38
D) 52.58
Answer: C
Diff: 1
Objective: 14.3.2
A) Because the p-value for the slope is 0.0423, we can reject the null hypothesis and conclude
that there is a relationship between the weekly rental and square footage of beach property.
C) Because the p-value for the slope is 0.0870, we can reject the null hypothesis and conclude
D) Because the p-value for the slope is 0.0870, we fail to reject the null hypothesis and conclude
that there is no relationship between the weekly rental and square footage of beach property.
Answer: D
Diff: 2
Objective: 14.5.1
null hypothesis and conclude that there is a relationship between the weekly rental and square
footage of beach property.
the null hypothesis and conclude that there is no relationship between the weekly rental and
square footage of beach property.
C) Because the 95% confidence interval for the population slope does not include zero, we can
reject the null hypothesis and conclude that there is a relationship between the weekly rental and
square footage of beach property.
D) Because the 95% confidence interval for the population slope does not include zero, we fail to
reject the null hypothesis and conclude that there is no relationship between the weekly rental
and square footage of beach property.
Answer: B
Diff: 2
Objective: 14.5.2

Some research has indicated that as people age they need less sleep. A random sample of adults
was selected and the number of hours that they slept last night was recorded. Simple regression
analysis was performed on this sample and the results are shown below.

A) 21
B) 22
C) 23
D) 24
Answer: C
Diff: 1
Objective: 14.3.1
120) According to these regression results, the average number of hours that a person who is 40
years old is ________.
A) 6.8
B) 7.1
C) 7.7
D) 8.4
Answer: C
Diff: 1
Objective: 14.3.1

121) The percentage of the variation in hours of sleep per night that is explained by the age of the
adult is ________.
A) 11.23
B) 15.27
C) 23.60
D) 39.07
Answer: D
Diff: 1
Objective: 14.3.2
A) Because the p-value for the slope is 0.065, we can reject the null hypothesis and conclude that
there is a relationship between the hours of sleep and the age of the adult.
that there is a relationship between the hours of sleep and the age of the adult.
C) Because the p-value for the slope is 0.065, we can reject the null hypothesis and conclude that
there is no relationship between the hours of sleep and the age of the adult.
D) Because the p-value for the slope is 0.065, we fail to reject the null hypothesis and conclude
that there is no relationship between the hours of sleep and the age of the adult.
Answer: A
Diff: 2
Objective: 14.5.1
null hypothesis and conclude that there is a relationship between the hours of sleep and the age
of the adult.
the null hypothesis and conclude that there is no relationship between the hours of sleep and the
age of the adult.
C) Because the 90% confidence interval for the population slope does not include zero, we can
reject the null hypothesis and conclude that there is a relationship between the hours of sleep and
the age of the adult.
D) Because the 90% confidence interval for the population slope does not include zero, we fail to
reject the null hypothesis and conclude that there is no relationship between the hours of sleep
and the age of the adult.
Answer: C
Diff: 2
Objective: 14.5.2

The table below shows the number of interceptions thrown during the season by seven randomly
selected National Football League teams and the number of games those teams won during the
season.
Wins
3
6
11
14
10
8
8
Interceptions
28
19
16
6
9
25
11
124) Determine the correlation coefficient for this data and interpret its meaning.
Answer:
x
y
xy
x2
y2
28
3
84
784
9
19
6
114
361
36
16
11
176
256
121
6
14
84
36
196
9
10
90
81
100
25
8
200
625
64
11
8
88
121
64
2
2
x 114 y 60 xy 836 x 2, 264 y 590
r
n xy x y
2
n x 2 x 2 n y 2

y

7 836 114 60
7 2, 264 114 2 7 590 60 2
988
988
r
0.804
2,852 530 1, 229.46
As the number of interceptions a team throws during the season increases, the number of wins
during the season tends to decrease.
Diff: 2
Objective: 14.2.1

125) Use the NFL team data to perform a hypothesis test to determine if the population
correlation coefficient is less than zero using = 0.05.
Answer:
H0 : 0
H1 : 0
r 0.804
n7
r
0.804
0.804
t
3.02
2
2
0.0707
1 r
1 0.804
n2
72
0.05
t 2.015
For a one-tail test with

and 7 2 = 5 degrees of freedom,
. Because
t 2.015
t = 3.02 is less than
, we reject the null hypothesis. Based on our sample, the
population correlation coefficient between wins and interceptions is less than zero and
statistically significant.
Diff: 1
Objective: 14.2.2
126) Use the NFL team data to:

A) Describe the regression line that will predict number of wins during the season based on the
number of interceptions thrown.
B) Interpret the slope of the regression equation.
C) Predict the average number of wins for a team that throws 12 interceptions during the season.
Answer: A)
x 114
y 60
xy 836
x 2 2, 264
b1
n xy x y
n x 2 x
b1
7 836 114 60
2
7 2, 264 114
b0
y b x
988
0.3464
2,852
60
114
b0
0.3464
14.2128
7
7
$
y 14.2128 0.3464 x
n
B) Each additional interception thrown during the season will reduce the number of wins during
the season by an average of 0.3464.
$
y 14.2128 0.3464 12 10.056 wins
C)
Diff: 2
Keywords: least squares method, slope
Objective: 14.3.1

127) Use the NFL team data to calculate the total sum of squares, sum of squares error, and sum
of squares regression.
Answer:
b0 14.2128 b1 0.3464 n 7 y 60 xy 836 y 2 590
SST y
SST 590
60
75.71
7
SSE y 2 b0 y b1 xy
SSE 590 14.2128 60 0.3464 836 26.82

SSR SST SSE
SSR 75.71 26.82 48.89
Diff: 1
Keywords: partitioning the sum of squares
Objective: 14.3.1
A) Calculate the coefficient of determination.
B) Interpret the meaning of the coefficient of determination.
C) Test the significance of the coefficient of determination using = 0.05.
Answer:
SSR = 48.89
SSE = 26.82
SST = 75.71 n = 7
R2
SSR 48.89
0.646
SST 75.71
A)
B) The number of interceptions thrown during the season by a team explains 64.6% of the
variation in wins during the season for that team.
C)
SSR
48.89
F
9.11
SSE 26.82
7 2
n 2
D1 1
D2 n 2 7 2 5
F 6.608
Reject H 0
The relationship between the number of interceptions thrown during the season and the number
of wins during the season is statistically significant at the 0.05 level.

Diff: 1
Objective: 14.3.2

129) Use the NFL team data to calculate:
A) The standard error of the estimate.
B) The 95% confidence interval for the average number of wins for a team that throws 14
interceptions during the season.
x 114
x 2 2, 264
Answer: SSE = 26.82
n=7
se
A)
B)
SSE
26.82
2.32
n2
72
$
y 14.2128 0.3464 14 9.36
x
x 114 16.29
n
7
d. f . n 2 7 2 5
t /2 2.571
CI $
y t /2 se
x x
x
2
CI 9.36 2.571 2.32
CI 9.36 5.96 0.143
1 14 16.29
2
7
114
2, 264
7
2
5.24
407.43
CI 9.36 5.96 0.156

CI 9.36 2.35
UCL 9.36 2.35 11.71
LCL 9.36 2.35 7.01
Diff: 2
Objective: 14.4.1

130) Use the NFL team data to calculate the 95% prediction interval for the number of wins for a
team that throws 14 interceptions during the season.
Answer
se 2.32
x 114 x 2 2, 264
n=7
1
PI $
y t /2 se 1
n
x x
x
2
1 14 16.29
PI 9.36 2.571 2.32 1
2
7
114
2, 264
7
2
PI 9.36 5.96 1 0.143
5.24
407.43
PI 9.36 5.96 1.156

PI 9.36 6.41
UPL 9.36 6.41 15.77
LPL 9.36 6.41 2.95
Diff: 2
Keywords: prediction interval for specific value of y
Objective: 14.4.2

A) Calculate the standard error of the slope.
B) Test the significance of the regression slope using = 0.05.
Answer:
A)
se 2.32 x 2 2, 264 n 7 x 16.29
sb
sb
se
n x
2.32
406.45
2.32
2, 264 7 16.29
0.115
B)
H 0 : 1 0
H1 : 1 0
1 0
b 1 0.3464 0
t
3.01
sb
0.115
t / 2 2.571
b1 0.3464
Because the absolute value of the test statistic (3.01) is greater than the absolute value of the
critical value (2.571), we reject the null hypothesis and conclude that there is a relationship
between the number of interceptions thrown during the season and the number of wins.
Diff: 2
Keywords: standard error of the slope, test the significance of the regression slope
Objective: 14.5.1
132) Use the NFL team data to determine the 95% confidence interval for the slope and interpret
the results.
Answer:
b1 0.3464
sb 0.115
CI b1 t /2 sb 0.3464 2.571 0.115
CI 0.3464 0.2957
UCL 0.3464 0.2957 0.0507
LCL 0.3464 0.2957 0.6421
Because this confidence interval does not include zero, we have evidence that there is a
relationship between the number of interceptions thrown during the season and the number of
wins.
Diff: 1

Objective: 14.5.2
The Marseille Water Taxi ferries tourists from the harbor at Marseille, France, to the Frioul
Islands in the Mediterranean Sea. The table below shows the number of passengers on the
noontime ferry over seven randomly selected days along with the current ambient temperature in
degrees Celsius.
Temperature
16
19
22
26
18
24
Passengers
15
20
20
22
10
18
133) Use the Marseille Water Taxi data to determine the correlation coefficient for this data and
interpret its meaning.
Answer:
x
y
xy
x2
y2
16
15
240
256
225
19
20
380
361
400
22
20
440
484
400
26
22
572
676
484
18
10
180
324
100
24
18
432
576
324
2
2
x 125 y 105 xy 2, 244 x 2, 677 y 1,933
n xy x y
2
n x 2 x 2 n y 2

y

6 2, 244 125 105
6 2, 677 125 2 6 1,933 105 2
339
339
r
0.677
437 573 500.40
As the ambient temperature increases, the number of passengers on the water taxi tends to

increase.
Diff: 2
Objective: 14.2.1
134) Use the Marseille Water Taxi data to perform a hypothesis test to determine if the
population correlation coefficient is more than zero using = 0.05.
Answer:
H0 : 0
H1 : 0
r 0.677
n6
r
0.677
0.677
t
1.84
2
2
0.1354
1 r
1 0.677
n2
62
0.05
t 2.132
t 1.84
For a one-tail test with
. Because
t 2.132
is less than
, we fail to reject the null hypothesis. Based on our sample, we cannot
conclude that the population correlation coefficient between temperature and number of
passengers is greater than zero and is, therefore, not statistically significant.
Diff: 1
Objective: 14.2.2

135) Use the Marseille Water Taxi data to:
A) Describe the regression line that will predict the number of passengers on the noontime ferry
based on the ambient temperature.
C) Predict number of passengers on the noontime ferry on a day that the ambient temperature is
19 degrees Celsius.
Answer:
x 125 y 105 xy 2, 244 x 2 2,677
A)
b1
n xy x y
n x 2 x
b1
6 2, 244 125 105

2
6 2, 677 125
b0
y b x
339
0.7757
437
105
125
b0
0.7757
1.3396
6
6
$
y 1.3396 0.7757 x
n
B) Each additional degree Celsius will increase the number of passengers on the water taxi by
an average of 0.7757.
$
y 1.3396 0.7757 19 16.1 passengers
C)
Diff: 2
Objective: 14.3.1
136) Use the Marseille Water Taxi data to calculate the total sum of squares, sum of squares
error, and sum of squares regression.
Answer:
b0 1.3396
b1 0.7757 n 6 y 105 xy 2, 244 y 2 1,933
SST y
105
SST 1,933
6
95.50
SSE y 2 b0 y b1 xy
SSE 1,933 1.3396 105 0.7757 2, 244 51.67

SSR SST SSE
SSR 95.50 51.67 43.83
Diff: 1
Objective: 14.3.1
Answer:
SSR = 43.83 SSE = 51.67 SST = 95.50
n=6
R2
SSR 43.83
0.459
SST 95.50
A)
B) The number of ambient temperature explains 45.9% of the variation in passengers on the
noontime water taxi.
C)
SSR
43.83
F
3.39
SSE 51.67
6 2
n 2
D1 1
D2 n 2 6 2 4
F 7.709
Do not reject H 0

The relationship between the ambient temperature and the number of passengers on the noontime
water taxi is not statistically significant at the 0.05 level.
Diff: 1
Objective: 14.3.2

138) Use the Marseille Water Taxi data to calculate:
B) The 95% confidence interval for the average number of passengers on a day when the
ambient temperature is 23 degrees Celsius.
Answer:
x 125 x 2 2,677
SSE = 51.67 n = 6
se
SSE
51.67
3.59
n2
62
A)
B)
$
y 1.3396 0.7757 23 19.18
x
x 125 20.83
n
6
d. f . n 2 6 2 4
t /2 2.776
CI $
y t /2 se
x x
x
2
CI 19.18 2.776 3.59
CI 19.18 9.97 0.167
1 23 20.83
2
6
125
2, 677
6
2
4.71
72.83
CI 19.18 9.97 0.232

CI 19.18 4.80
UCL 19.18 4.80 23.98
LCL 19.18 4.80 14.38
Diff: 2
Objective: 14.4.1

139) Use the Marseille Water Taxi data to calculate the 95% prediction interval for the number of
passengers on a day when the ambient temperature is 23 degrees Celsius.
Answer:
se 3.59
n=6
1
PI $
y t /2 se 1
n
x 125
x x
x
2
PI 19.18 2.776 3.59
2, 677
1 23 20.83
1
2
6
125
2, 677
6
PI 19.18 9.97 1 0.167
4.71
72.83
PI 19.18 9.97 1.232

PI 19.18 11.07
UPL 19.18 11.07 30.25
LPL 19.18 11.07 8.11
Diff: 2
Objective: 14.4.2

Answer:
A)
se 3.59 x 2 2, 677 n 6 x 20.83
sb
sb
se
3.59
73.67
n x
3.59
2, 677 6 20.83
0.418
B)
H 0 : 1 0
H1 : 1 0
1 0
b 0.7757 0
t 1 1
1.86
sb
0.418
t /2 2.776
b1 0.7757
Because the absolute value of the test statistic (1.86) is less than the absolute value of the critical
value (2.776), we fail to reject the null hypothesis and conclude that there is no relationship
between the number of passengers on the noontime water taxi and the ambient temperature.
Diff: 2
Objective: 14.5.1
141) Use the Marseille Water Taxi data to determine the 95% confidence interval for the slope
and interpret the results.
Answer:
b1 0.7757
sb 0.418
CI b1 t /2 sb 0.7757 2.776 0.418
CI 0.7757 1.1604
UCL 0.7757 1.1604 1.9361
LCL 0.7757 1.1604 0.3847
Because this confidence interval does include zero, we have evidence that there is no relationship
between the number of passengers on the noontime water taxi and the ambient temperature.
Diff: 1
Objective: 14.5.2

Steve Taylor is the owner of Home Plus, which is a chain of home improvement stores. He
would like to investigate the relationship between month advertising and monthly sales. The
table below shows the amount spent on advertising, in millions of dollars, over several months
along with the corresponding sales, also in millions of dollars.
Month
1
2
3
4
5
Advertising
($ millions)
3
3
4
5
1
Sales
($ millions)
11
13
12
21
7
142) Use the Home Plus data to determine the correlation coefficient for this data and interpret
its meaning.
Answer:
x
y
xy
x2
y2
3
11
33
9
121
3
13
39
9
169
4
12
48
16
144
5
21
105
25
441
1
7
7
1
49
2
2
x 16
y 64 xy 232 x 60 y 924
n xy x y
n x 2 x 2 n y 2
2
y
5 232 16 64
5 60 16 2 5 924 64 2
136
136
r
0.896
44 524 151.84
As the amount spent on monthly advertising increases, monthly sales tend to increase.
Diff: 2
Objective: 14.2.1

143) Use the Home Plus data to perform a hypothesis test to determine if the population
correlation coefficient is different than zero using = 0.05.
Answer:
H0 : 0
H1 : 0
t
r
1 r2
n2
0.896
1 0.896
52
0.896
3.50
0.0657
0.05
t / 2 3.182
For a two-tail test with

. Because
t 3.50
t /2 3.182
is greater than
, we reject the null hypothesis. Based on our sample, we
conclude that the population correlation coefficient between advertising and sales is different
than zero and is statistically significant.
Diff: 1
Objective: 14.2.2
144) Use the Home Plus data to:
A) Describe the regression line that will predict monthly sales based on the monthly advertising.
C) Predict the average number of sales for a month with $2 million spent on advertising.
Answer:
A)
x 16
y 64
xy 232 x 2 60
b1
n xy x y
n x 2 x
b1
5 232 16 64
2
5 60 16
b0
y b x
136
3.0909
44
64
16
b0 3.0909 2.9091
5
5
$
y 2.9091 3.0909 x
n
B) Each additional $1 spent on advertising per month will increase monthly sales by an average
of $3.0909.

$
y 2.9091 3.0909 2 $9.09 million
C)
Diff: 2
Objective: 14.3.1

145) Use the Home Plus data to calculate the total sum of squares, sum of squares error, and sum
of squares regression.
Answer:
b0 2.9091 b1 3.0909 n 5 y 64 xy 232 y 2 924
SST y
SST 924
64
104.80
5
SSE y 2 b0 y b1 xy
SSE 924 2.9091 64 3.0909 232 20.73

SSR SST SSE
SSR 104.80 20.73 84.07
Diff: 1
Objective: 14.3.1
Answer:
SSR = 84.07
SSE = 20.73
SST = 104.80 n = 5
R2
SSR 84.07
0.802
SST 104.80
A)
B) The amount of money spent on advertising explains 80.2% of the variation in monthly sales.
C)
SSR
84.07
F
12.17
SSE 20.73
5 2
n 2
D1 1
D2 n 2 5 2 3
F 10.128
Reject H 0
The relationship between the amount of money spent on advertising and monthly sales is
statistically significant at the 0.05 level.
Diff: 1

Objective: 14.3.2

147) Use the Home Plus data to calculate:
B) The 95% confidence interval for the average sales for a month where $4 million was spent on
advertising.
Answer:
x 16 x 2 60
SSE = 20.73
n=5
se
A)
B)
SSE
20.73
2.63
n2
52
$
y 2.9091 3.0909 4 15.27
x
x 16 3.2
n
5
d. f . n 2 5 2 3
t /2 3.182
CI $
y t /2 se
x x
x
2
CI 15.27 3.182 2.63
CI 15.27 8.27 0.20
1 4 3.2
2
5
16
60
5
2
0.64
8.80
CI 15.27 8.37 0.273

CI 15.27 4.37
UCL 15.27 4.37 19.64
LCL 15.27 4.37 10.90
Diff: 2
Objective: 14.4.1

148) Use the Home Plus data to calculate the 95% prediction interval for the sales for a month
where $4 million was spent on advertising.
Answer:
se 2.63
x 16 x2 60
n=5
1
PI $
y t /2 se 1
n
x x
x
2
PI 15.27 3.182 2.63
1 4 3.2
1
2
5
16
60
5
PI 15.27 8.27 1 0.20
0.64
8.80
PI 15.27 8.37 1.273

PI 15.27 9.44
UPL 15.27 9.44 24.71
LPL 15.27 9.44 5.84
Diff: 2
Objective: 14.4.2

Answer:
A)
se 2.63 x 2 60 n 5 x 3.2
se
sb
sb
x
2.63
8.80
n x
2.63
60 5 3.2
0.886
B)
H 0 : 1 0
H1 : 1 0
1 0
b 3.0909 0
t 1 1
3.49
sb
0.886
t /2 3.182
b1 3.0909
Because the absolute value of the test statistic (3.49) is greater than the absolute value of the
critical value (3.182), we reject the null hypothesis and conclude that there is a relationship
between the amount of money spent on advertising and monthly sales.
Diff: 2
Objective: 14.5.1
150) Use the Home Plus data to determine the 95% confidence interval for the slope and
interpret the results.
Answer:
b1 3.0909
sb 0.886
CI b1 t /2 sb 3.0909 3.182 0.886
CI 3.0909 2.8193
UCL 3.0909 2.8193 5.9102
LCL 3.0909 2.8193 0.2716
Because this confidence interval does not include zero, we have evidence that there is a
relationship between the amount of money spent on advertising and monthly sales.
Diff: 1

Objective: 14.5.2
Business Statistics (Donnelly)

Chapter 16 Forecasting
1) With qualitative forecasting, historical data and math are used to predict future conditions.
Answer: FALSE
Diff: 1
Keywords: quantitative forecasting
Objective: 16.1.1
2) To observe a seasonal component in a time series, data needs to be collected more frequently
than on an annual basis.
Answer: TRUE
Diff: 1
Keywords: seasonal component, time series
Objective: 16.1.1
3) With the wide range of computer software available to generate forecasts from time-series
data, it is not necessary to construct an XY scatter plot of the data.
Answer: FALSE
Diff: 1
Keywords: XY scatter plot
Objective: 16.1.1
4) The primary goal of a seasonal forecasting technique is to remove the random movements in a
time series by averaging the historical data.
Answer: FALSE
Diff: 1
Keywords: smoothing forecasting technique
Objective: 16.2.1
5) Smoothing forecasting techniques work best with data that is fairly consistent over timedata
that is without significant trend, seasonal, or cyclical components.
Answer: TRUE
Diff: 1
Keywords: smoothing forecasting technique
Objective: 16.2.1

6) The average forecasting error for a time-series technique can be determined through the mean
absolute deviation.
Answer: TRUE
Diff: 1
Keywords: mean absolute deviation, time series
Objective: 16.2.1
7) Forecasting errors for a time-series technique must always be non-negative (i.e., zero or
positive values).
Answer: FALSE
Diff: 1
Keywords: forecasting errors
Objective: 16.2.1
8) All else being equal, choose the forecast with the higher mean absolute deviation.
Answer: FALSE
Diff: 1
Keywords: mean absolute deviation
Objective: 16.2.1
9) In general, a four-period simple moving average forecast will experience less forecasting error
than a three-period moving simple average forecast because the four-period technique uses more
historical data.
Answer: FALSE
Diff: 1
Keywords: simple moving average forecast
Objective: 16.2.1
10) Increasing the number of periods in a simple moving average forecast causes the forecasting
technique to be less responsive to changes in the historical data.
Answer: TRUE
Diff: 1
Keywords: simple moving average forecast
Objective: 16.2.1
11) The convention for weighted moving average forecasting is to assign the lowest weight to the
most recent data and the highest weight to the oldest data with the reasoning that the most recent
data is more relevant.
Answer: FALSE
Diff: 1
Keywords: weighted moving average forecast
Objective: 16.2.1
12) The simple moving average forecast is actually a variation of the weighted moving average

but with all of the weights being equal.
Answer: TRUE
Diff: 1
Keywords: weighted moving average forecast, weighted moving average forecast
Objective: 16.2.1
13) When using exponential smoothing, there is no forecasting error for Period 1 because we
F1 A1
arbitrarily assign
to start the forecasting technique.
Answer: TRUE
Diff: 1
Keywords: exponential smoothing, forecasting error
Objective: 16.2.1
14) As the value of alpha increases for the same data using exponential smoothing, the MAD
tends to increase on a straight line across various values of alpha.
Answer: FALSE
Diff: 1
Keywords: exponential smoothing, mean absolute deviation
Objective: 16.2.1
15) Larger values of alpha with exponential smoothing tend to make the forecast less responsive
to previous forecasts errors.
Answer: FALSE
Diff: 2
Objective: 16.2.1
16) The exponential smoothing technique works well for generating forecasts from data that have
significant trend or seasonal components.
Answer: FALSE
Diff: 1
Keywords: exponential smoothing, trend, seasonal
Objective: 16.2.1
17) Exponential smoothing with trend adjustment is a technique that compensates an exponential
smoothing forecast for any trend detected in the data.
Answer: TRUE
Diff: 1
Keywords: exponential smoothing with trend adjustment
Objective: 16.2.1
18) Because Tt reflects the overall trend component in the time series up to period t, we need to

set this value equal to 1 for the first period as a starting point when using exponential smoothing
with trend adjustment.
Answer: FALSE
Diff: 1
Objective: 16.2.1
19) For a relatively large beta (closer to 1.0), the current trend adjustment is more affected by the
most recent trend when using exponential smoothing with trend adjustment.
Answer: TRUE
Diff: 2
Objective: 16.2.1
20) Simple linear regression describes a straight line that explains how a change in a dependent
variable influences a change in an independent variable.
Answer: FALSE
Diff: 2
Keywords: simple linear regression
Objective: 16.3.1
21) Trend projection is a forecasting technique that projects into the future a linear regression
equation that best fits the data in a time series.
Answer: TRUE
Diff: 1
Keywords: trend projection
Objective: 16.3.1
22) When displaying the trend projection graphically, the time period is placed on the y-axis and
the forecasted value is placed on the x-axis.
Answer: FALSE
Diff: 1
Objective: 16.3.1
23) The slope of the regression line in trend projection measures the rate at which the forecasted
variable changes from one time period to the next.
Answer: TRUE
Diff: 1
Objective: 16.3.1
24) The farther out into the future that we project the regression trend line, the less reliable the
forecasted value will be.

Answer: TRUE
Diff: 1
Objective: 16.3.1
25) Residuals describe the difference between the actual and predicted values of independent
variables in a regression analysis.
Answer: FALSE
Diff: 2
Keywords: residuals
Objective: 16.3.1
26) Autocorrelation describes the condition when residuals in a regression model are independent
of one another.
Answer: FALSE
Diff: 2
Keywords: autocorrelation
Objective: 16.3.1
27) The Durbin-Watson statistic is used to test for the presence of autocorrelation in a series of
residuals.
Answer: TRUE
Diff: 1
Keywords: autocorrelation, Durbin-Watson statistic
Objective: 16.3.1
28) Positive autocorrelation is present in a time series when we observe a pattern of positive or
negative residuals in succession.
Answer: TRUE
Diff: 1
Keywords: positive autocorrelation
Objective: 16.3.1
29) Negative autocorrelation is present in a time series when the consecutive residuals are close
to one another, resulting in a relatively small Durbin-Watson statistic.
Answer: FALSE
Diff: 2
Keywords: negative autocorrelation, Durbin-Watson statistic
Objective: 16.3.1
30) Negative autocorrelation is rarely observed in a time series.

Answer: TRUE
Diff: 1

Keywords: negative autocorrelation
Objective: 16.3.1
31) When performing a hypothesis test for the presence of positive autocorrelation, the null
hypothesis states that positive autocorrelation is not present in the time series.
Answer: TRUE
Diff: 1
Objective: 16.3.1
32) The hypothesis test for autocorrelation in a time series is a two-tail test because we only test
for the presence of positive autocorrelation.
Answer: FALSE
Diff: 1
Objective: 16.3.1
33) The presence of autocorrelation in a time series could result in concluding that the regression
coefficient for the trend line is statistically significant when, in reality, it is not.
Answer: TRUE
Diff: 2
Keywords: autocorrelation
Objective: 16.3.1
34) A weighted moving average assigns the average value of a set of data points to the center
time period.
Answer: FALSE
Diff: 1
Keywords: centered moving average
Objective: 16.4.1
35) The purpose of calculating a centered moving average is to remove the seasonal component
from the time series.
Answer: TRUE
Diff: 1
Objective: 16.4.1
36) The purpose of calculating a centered moving average is to remove the trend component
from the time series.
Answer: FALSE
Diff: 1

Objective: 16.4.1
37) Normalized seasonal factors are seasonal factors that are adjusted so they add up to a number
very close to 1.0.
Answer: FALSE
Diff: 1
Keywords: normalized seasonal factors
Objective: 16.4.1
38) Deseasonalizing the time series removes the effect that the seasonal component has on the
data.
Answer: TRUE
Diff: 1
Keywords: seasonal component
Objective: 16.4.1
39) A time series is deseasonalized by dividing the actual time series value by its corresponding
trend component.
Answer: FALSE
Diff: 1
Keywords: seasonal component
Objective: 16.4.1
40) The random component is not part of the forecasting equation for multiplicative
decomposition because randomness, by definition, cannot be predicted.
Answer: TRUE
Diff: 1
Keywords: random component, multiplicative decomposition
Objective: 16.4.1
41) If the seasonal component of a time series consists of five seasonal categories (i.e., Monday,
Tuesday, Wednesday, Thursday, and Friday), five dummy variables are needed for the forecasting
regression model.
Answer: FALSE
Diff: 1
Keywords: seasonal component, dummy variables
Objective: 16.4.2

42) ________ forecasting is a subjective technique that relies primarily on a knowledgeable
person's intuition and judgment to predict future events.
A) Quantitative
B) Time series
C) Qualitative
D) Exponential
Answer: C
Diff: 1
Keywords: qualitative forecasting
Objective: 16.1.1
43) A ________ component is present in a time series if a general upward or downward
movement can be observed in the data.
A) cyclical
B) seasonal
C) random
D) trend
Answer: D
Diff: 1
Keywords: trend component, time series
Objective: 16.1.1
44) A ________ component is present in a time series if a consistent pattern in the data can be
associated with a calendar.
A) cyclical
B) seasonal
C) random
D) trend
Answer: B
Diff: 1
Keywords: seasonal component, time series
Objective: 16.1.1
45) A ________ component is movement in a time series that results from upward or downward
swings in the U.S. or world economy over a period of several years.
A) cyclical
B) seasonal
C) random
D) trend
Answer: A
Diff: 1
Keywords: cyclical component, time series
Objective: 16.1.1

46) A ________ component is defined as the unpredictable movements in a time series that
cannot be attributed to either trend, seasonal, or cyclical components.
A) business
B) dummy
C) random
D) forecasted
Answer: C
Diff: 1
Keywords: random component, time series
Objective: 16.1.1
47) The time series component that is often referred to as "noise" because it has no detectable
pattern is the ________ component.
A) cyclical
B) seasonal
C) random
D) trend
Answer: C
Diff: 1
Keywords: random component, time series
Objective: 16.1.1
48) Simple moving average is an example of a ________ forecasting technique.
A) smoothing
B) regression analysis
C) multiplicative decomposition
D) seasonal
Answer: A
Diff: 1
Keywords: simple moving average
Objective: 16.2.1
49) Weighted moving average is an example of a ________ forecasting technique.
A) smoothing
B) regression analysis
C) multiplicative decomposition
D) seasonal
Answer: A
Diff: 1
Keywords: weighted moving average
Objective: 16.2.1

50) A(n) ________ forecast is generated by averaging the most recent p values in a time series.
A) exponential smoothing
B) regression
C) weighted moving average
D) simple moving average
Answer: D
Diff: 1
Objective: 16.2.1
51) The following data represent the number of refrigerators sold for each of the past five months
for Templeton Appliances.
Month
1
2
3
4
5
Sales
25
20
40
35
30
Using a two-period simple moving average, the sales forecast for Month 6 is ________.
A) 32.5
B) 40.0
C) 45.0
D) 50.0
Answer: A
Diff: 1
Objective: 16.2.1

Month
1
2
3
4
5
Sales
25
20
40
35
30
Using a two-period simple moving average, the forecasting error for Month 3 is ________.
A) 2.5
B) -5.0
C) -7.5
D) 17.5
Answer: D
Diff: 1
Keywords: simple moving average, forecasting error
Objective: 16.2.1
Month
1
2
3
4
5
Sales
25
20
40
35
30
Using a two-period simple moving average, the mean absolute deviation is ________.
A) 2.5
B) 5.0
C) 7.5
D) 10.0
Answer: D
Diff: 1
Keywords: simple moving average, mean absolute deviation
Objective: 16.2.1
54) The following data represent the number of sweatshirts sold for each of the past six days for
Hoys Department Store at the beach in Avalon, New Jersey.

Day
1
2
3
4
5
6
Sales
7
12
8
4
9
14
Using a three-period simple moving average, the sales forecast for Day 7 is ________.
A) 6.5
B) 7.2
C) 7.9
D) 9.0
Answer: D
Diff: 1
Objective: 16.2.1
Day
1
2
3
4
5
6
Sales
7
12
8
4
9
14
Using a three-period simple moving average, the forecasting error for Day 6 is ________.
A) 2.8
B) -4.4
C) -1.0
D) 7.0
Answer: D
Diff: 1
Keywords: simple moving average, forecasting error
Objective: 16.2.1

Day
1
2
3
4
5
6
Sales
7
12
8
4
9
14
Using a three-period simple moving average, the mean absolute deviation is ________.
A) 2.0
B) 3.6
C) 4.3
D) 9.7
Answer: C
Diff: 1
Objective: 16.2.1
Month
1
2
3
4
5
Sales
25
20
40
35
30
Using a two-period weighted moving average with weights 4 and 1, the sales forecast for Month
6 is ________.
A) 25.0
B) 31.0
C) 36.7
D) 37.2
Answer: B
Diff: 1
Objective: 16.2.1

Month
1
2
3
4
5
Sales
25
20
40
35
30
Using a two-period weighted moving average with weights 4 and 1, the forecasting error for
Month 3 is ________.
A) 2.5
B) -4.0
C) 19.0
D) -11.0
Answer: C
Diff: 1
Keywords: weighted moving average, forecasting error
Objective: 16.2.1
Month
1
2
3
4
5
Sales
25
20
40
35
30
Using a two-period weighted moving average with weights 4 and 1, the mean absolute deviation
is ________.
A) 2.5
B) 5.0
C) 8.7
D) 10.0
Answer: C
Diff: 1
Keywords: weighted moving average, mean absolute deviation
Objective: 16.2.1

Day
1
2
3
4
5
6
Sales
7
12
8
4
9
14
Using a three-period weighted moving average with weights 5, 2, and 1, the sales forecast for
Day 7 is ________.
A) 5.8
B) 6.5
C) 6.9
D) 11.5
Answer: D
Diff: 1
Objective: 16.2.1
Day
1
2
3
4
5
6
Sales
7
12
8
4
9
14
Using a three-period weighted moving average with weights 5, 2, and 1, the forecasting error for
Month 5 is ________.
A) 3.0
B) -1.0
C) 6.9
D) -4.4
Answer: A
Diff: 1
Keywords: weighted moving average, forecasting error
Objective: 16.2.1

Day
1
2
3
4
5
6
Sales
7
12
8
4
9
14
Using a three-period weighted moving average with weights 5, 2, and 1, the mean absolute
deviation is ________.
A) 3.2
B) 4.8
C) 7.8
D) 9.3
Answer: B
Diff: 1
Objective: 16.2.1
63) ________ adjusts the previous forecast with a portion of the previous period's forecasting
error.
A) Simple moving average
B) Weighted moving average
C) Exponential smoothing
D) Multiplicative decomposition
Answer: C
Diff: 1
Keywords: exponential smoothing
Objective: 16.2.1
64) ________ can be described as a "self-correcting" forecasting technique.
A) Simple moving average
B) Weighted moving average
C) Exponential smoothing
D) Multiplicative decomposition
Answer: C
Diff: 1
Objective: 16.2.1
Month
Sales

1
2
3
4
5
25
20
40
35
30
Using an exponential smoothing technique with alpha equal to 0.8, the sales forecast for Month 6
is ________.
A) 31.0
B) 34.6
C) 37.1
D) 38.8
Answer: A
Diff: 1
Objective: 16.2.1
Month
1
2
3
4
5
Sales
25
20
40
35
30
Using an exponential smoothing technique with alpha equal to 0.8, the forecasting error for
Month 5 is ________.
A) 6.5
B) -5.2
C) -7.4
D) 10.0
Answer: B
Diff: 1
Objective: 16.2.1
Month
Sales

1
2
3
4
5
25
20
40
35
30
Using an exponential smoothing technique with alpha equal to 0.8, the mean absolute deviation
is ________.
A) 7.6
B) 10.7
C) 12.8
D) 14.0
Answer: A
Diff: 1
Objective: 16.2.1
Month
1
2
3
4
5
Sales
25
20
40
35
30
Using an exponential smoothing with trend adjustment technique with alpha equal to 0.6 and
beta equal to 0.2, the sales forecast for Month 6 is ________.
A) 28.0
B) 30.7
C) 32.6
D) 35.6
Answer: C
Diff: 2
Objective: 16.2.1
Month
1
Sales
25

2
3
4
5
20
40
35
30
beta equal to 0.2, the forecasting error for Month 4 is ________.
A) 2.4
B) -5.5
C) -7.9
D) 9.9
Answer: A
Diff: 2
Keywords: exponential smoothing with trend adjustment, forecasting error
Objective: 16.2.1
Month
1
2
3
4
5
Sales
25
20
40
35
30
beta equal to 0.2, the mean absolute deviation is ________.
A) 6.2
B) 7.7
C) 10.4
D) 12.0
Answer: B
Diff: 2
Keywords: exponential smoothing with trend adjustment, mean absolute deviation
Objective: 16.2.1
Day
1
Sales
7

2
3
4
5
6
12
8
4
9
14
Using an exponential smoothing technique with alpha equal to 0.4, the sales forecast for Day 7 is
________.
A) 8.7
B) 10.2
C) 10.9
D) 11.5
Answer: B
Diff: 1
Objective: 16.2.1
Day
1
2
3
4
5
6
Sales
7
12
8
4
9
14
Using an exponential smoothing technique with alpha equal to 0.4, the forecasting error for Day
4 is ________.
A) 6.0
B) -4.6
C) -7.1
D) 8.8
Answer: B
Diff: 1
Objective: 16.2.1
Day
1
Sales
7

2
3
4
5
6
12
8
4
9
14
Using an exponential smoothing technique with alpha equal to 0.4, the mean absolute deviation
is ________.
A) 3.8
B) 6.7
C) 6.9
D) 7.2
Answer: A
Diff: 1
Objective: 16.2.1
Day
1
2
3
4
5
6
Sales
7
12
8
4
9
14
beta equal to 0.6, the sales forecast for Day 7 is ________.
A) 9.1
B) 9.6
C) 10.8
D) 11.5
Answer: C
Diff: 2
Objective: 16.2.1
Day
1
Sales
7

2
3
4
5
6
12
8
4
9
14
beta equal to 0.6, the forecasting error for Day 4 is ________.
A) 5.8
B) -5.7
C) -7.5
D) 8.3
Answer: B
Diff: 2
Keywords: exponential smoothing with trend adjustment, forecasting error
Objective: 16.2.1
Day
1
2
3
4
5
6
Sales
7
12
8
4
9
14
beta equal to 0.6, the mean absolute deviation is ________.
A) 3.9
B) 4.7
C) 6.1
D) 6.8
Answer: A
Diff: 2
Objective: 16.2.1
77) When perfect positive autocorrelation is present in a time series, the Durbin-Watson statistic
will be equal to ________.
A) 0
B) 1
C) 3
D) 4

Answer: A
Diff: 1
Keywords: perfect positive autocorrelation, Durbin-Watson statistic
Objective: 16.3.1
78) When perfect negative autocorrelation is present in a time series, the Durbin-Watson statistic
will be equal to ________.
A) 0
B) 1
C) 3
D) 4
Answer: D
Diff: 1
Keywords: perfect negative autocorrelation, Durbin-Watson statistic
Objective: 16.3.1
79) When testing for the presence of positive autocorrelation and the Durbin-Watson statistic is
less than the lower critical value, which one of the following statements is true?
A) We fail to reject the null hypothesis and conclude that a positive autocorrelation is present in
the time series.
B) We fail to reject the null hypothesis and conclude that no positive autocorrelation is present in
the time series.
C) We reject the null hypothesis and conclude that a positive autocorrelation is present in the
time series.
D) The hypothesis test is inconclusive.
Answer: C
Diff: 1
Keywords: positive autocorrelation, Durbin-Watson statistic
Objective: 16.3.1
between the lower critical value and upper critical value, which one of the following statements
is true?
the time series.
the time series.

time series.
Answer: D
Diff: 1
Objective: 16.3.1
greater than the upper critical value, which one of the following statements is true?
the time series.
the time series.
time series.
Answer: B
Diff: 1
Objective: 16.3.1
82) The following data represent the end-of-month stock price of Facebook rounded to the
nearest dollar from June to December.
Date
June
July
August
September
Price
$25
$37
$41
$50

October
November
December
$49
$47
$55
The trend projection slope for this data is ________.

A) -1.3555
B) -2.3903
C) 4.2143
D) 6.0952
Answer: C
Diff: 1
Keywords: trend projection slope
Objective: 16.3.1
Date
June
July
August
September
October
November
December
Price
$25
$37
$41
$50
$49
$47
$55
The trend projection intercept for this data is ________.

A) -1.6935
B) -3.4009
C) 26.5714
D) 38.2850
Answer: C
Diff: 1
Keywords: trend projection intercept
Objective: 16.3.1

Date
June
July
August
September
October
November
December
Price
$25
$37
$41
$50
$49
$47
$55
The residual for the end of September is ________.

A) -3.5
B) -4.2
C) 1.8
D) 6.6
Answer: D
Diff: 1
Keywords: residual
Objective: 16.3.1
Date
June
July
August
September
October
November
December
Price
$25
$37
$41
$50
$49
$47
$55
The predicted stock price for Facebook at the end of January using trend projection is ________.
A) $56.33
B) $60.29
C) $67.50
D) $69.35
Answer: B
Diff: 1
Objective: 16.3.1

Date
June
July
August
September
October
November
December
Price
$25
$37
$41
$50
$49
$47
$55
The mean absolute deviation using trend projection is ________.

A) 1.73
B) 1.98
C) 2.55
D) 3.35
Answer: D
Diff: 1
Objective: 16.3.1
87) The following table displays the amount of data that Steve has used each month, in GB, with
his iPhone during the past six months.
Month
Data
1
5
2
3
3
9
4
7
5
10
6
11

A) 1.4000
B) 1.7955
C) 1.9021
D) 2.6611
Answer: A
Diff: 1
Objective: 16.3.1

Month
Data
1
5
2
3
3
9
4
7
5
10
6
11

A) -1.6723
B) -2.0089
C) 2.6000
D) 3.9803
Answer: C
Diff: 1
Objective: 16.3.1
Month
Data
1
5
2
3
3
9
4
7
5
10
6
11
The residual for Month 3 is ________.

A) -0.7
B) -3.8
C) 1.0
D) 2.2
Answer: D
Diff: 1
Keywords: residual
Objective: 16.3.1

Month
Data
1
5
2
3
3
9
4
7
5
10
6
11
The predicted data usage for Month 7 using trend projection is ________.
A) 10.0 GB
B) 10.4 GB
C) 11.1 GB
D) 12.4 GB
Answer: D
Diff: 1
Objective: 16.3.1
Month
Data
1
5
2
3
3
9
4
7
5
10
6
11

A) 0.89
B) 1.20
C) 2.74
D) 3.15
Answer: B
Diff: 1
Objective: 16.3.1
92) The following data represent the number of complaints per month that customer service
received at a large retailer over the last 15 months.

Month
1
2
3
4
5
6
7
8
Complaints
10
7
12
10
8
11
9
7
Month
9
10
11
12
13
14
15
Complaints
9
5
8
6
7
3
5

A) -0.400
B) -0.105
C) 1.651
D) 3.250
Answer: A
Diff: 1
Objective: 16.3.1

Month
1
2
3
4
5
6
7
8
Complaints
10
7
12
10
8
11
9
7
Month
9
10
11
12
13
14
15
Complaints
9
5
8
6
7
3
5

A) -3.116
B) -9.655
C) 11.000
D) 14.520
Answer: C
Diff: 1
Objective: 16.3.1

Month
1
2
3
4
5
6
7
8
Complaints
10
7
12
10
8
11
9
7
Month
9
10
11
12
13
14
15
Complaints
9
5
8
6
7
3
5
The residual for Month 6 is ________.

A) -2.6
B) -0.8
C) 2.4
D) 5.0
Answer: C
Diff: 1
Keywords: residual
Objective: 16.3.1

Month
1
2
3
4
5
6
7
8
Complaints
10
7
12
10
8
11
9
7
Month
9
10
11
12
13
14
15
Complaints
9
5
8
6
7
3
5
The predicted number of complaints for Month 16 using trend projection is ________.
A) 3.0
B) 3.5
C) 3.9
D) 4.6
Answer: D
Diff: 1
Objective: 16.3.1
Month
Complaints
Month
Complaints

1
2
3
4
5
6
7
8
10
7
12
10
8
11
9
7
9
10
11
12
13
14
15
9
5
8
6
7
3
5

A) 1.05
B) 1.36
C) 3.42
D) 4.19
Answer: B
Diff: 1
Objective: 16.3.1
Month
Complaints
Month
Complaints

1
2
3
4
5
6
7
8
10
7
12
10
8
11
9
7
9
10
11
12
13
14
15
9
5
8
6
7
3
5
The Durbin-Watson statistic for this time series is ________.

A) 2.81
B) 3.56
C) 4.25
D) 5.88
Answer: A
Diff: 2
Keywords: Durbin-Watson statistic
Objective: 16.3.1
Month
1
Complaints
10
Month
9
Complaints
9

2
3
4
5
6
7
8
7
12
10
8
11
9
7
10
11
12
13
14
15
5
8
6
7
3
5
Which one of the following statements is true for the hypothesis test for positive autocorrelation
using = 0.05?
A) Because the Durbin-Watson statistic is less than the lower critical value, we fail to reject the
null hypothesis and conclude that positive autocorrelation is present in the time series.
B) Because the Durbin-Watson statistic is less than the lower critical value, we reject the null
hypothesis and conclude that positive autocorrelation is not present in the time series.
C) Because the Durbin-Watson statistic is greater than the upper critical value, we fail to reject
the null hypothesis and conclude that no positive autocorrelation is present in the time series.
D) Because the Durbin-Watson statistic is greater than the lower critical value, we reject the null
hypothesis and conclude that positive autocorrelation is present in the time series.
Answer: C
Diff: 2
Objective: 16.3.1
99) The following table shows the number of employees at Diamond Corporation over the past
16 years.
Year
1
2
Employees
16
13
Year
9
10
Employees
17
20

3
4
5
6
7
8
11
14
13
20
23
15
11
12
13
14
15
16
16
19
17
25
20
22

A) 0.1270
B) 0.3219
C) 0.5544
D) 1.2554
Answer: C
Diff: 1
Objective: 16.3.1
16 years.
Year
1
2
Employees
16
13
Year
9
10
Employees
17
20

3
4
5
6
7
8
11
14
13
20
23
15
11
12
13
14
15
16
16
19
17
25
20
22

A) -1.3215
B) -3.6504
C) 7.5641
D) 12.8500
Answer: D
Diff: 1
Objective: 16.3.1
16 years.
Year
1
2
3
4
5
6
7
8
Employees
16
13
11
14
13
20
23
15
Year
9
10
11
12
13
14
15
16
Employees
17
20
16
19
17
25
20
22
The residual for Year 7 is ________.

A) -1.7
B) -3.2
C) 4.8
D) 6.3
Answer: D
Diff: 1
Keywords: residual
Objective: 16.3.1
16 years.
Year
1
2
Employees
16
13
Year
9
10
Employees
17
20

3
4
5
6
7
8
11
14
13
20
23
15
11
12
13
14
15
16
16
19
17
25
20
22
The predicted number of employees for Year 17 using trend projection is ________.
A) 20.7
B) 22.3
C) 23.5
D) 24.0
Answer: B
Diff: 1
Objective: 16.3.1
16 years.
Year
1
2
3
4
5
6
7
8
Employees
16
13
11
14
13
20
23
15
Year
9
10
11
12
13
14
15
16
Employees
17
20
16
19
17
25
20
22

A) 0.77
B) 1.40
C) 2.38
D) 3.62
Answer: C
Diff: 1
Objective: 16.3.1
16 years.
Year
1
2
Employees
16
13
Year
9
10
Employees
17
20

3
4
5
6
7
8
11
14
13
20
23
15
11
12
13
14
15
16
16
19
17
25
20
22
The Durbin-Watson statistic for this time series is ________.

A) 2.15
B) 2.70
C) 3.44
D) 4.07
Answer: A
Diff: 2
Keywords: Durbin-Watson statistic
Objective: 16.3.1
16 years.
Year
1
2
3
Employees
16
13
11
Year
9
10
11
Employees
17
20
16

4
5
6
7
8
14
13
20
23
15
12
13
14
15
16
19
17
25
20
22
Which one of the following statements is true for the hypothesis test for positive autocorrelation
using = 0.05?
A) Because the Durbin-Watson statistic is less than the lower critical value, we fail to reject the
null hypothesis and conclude that positive autocorrelation is present in the time series.
B) Because the Durbin-Watson statistic is less than the lower critical value, we reject the null
hypothesis and conclude that positive autocorrelation is not present in the time series.
C) Because the Durbin-Watson statistic is greater than the upper critical value, we fail to reject
the null hypothesis and conclude that no positive autocorrelation is present in the time series.
D) Because the Durbin-Watson statistic is greater than the lower critical value, we reject the null
hypothesis and conclude that positive autocorrelation is present in the time series.
Answer: C
Diff: 2
Objective: 16.3.1
106) A forecasting technique that includes both the trend and seasonality components is
A) weighted moving average.
B) exponential smoothing.
C) exponential smoothing with trend adjustment.
D) multiplicative decomposition.
Answer: D
Diff: 1
Keywords: multiplicative decomposition
Objective: 16.4.1
107) ________ represent the seasonal and random components in the original time series and is
found by dividing the time series value by its centered moving average.
A) Seasonal factors
B) Ratio-to-moving-averages
C) Normalized seasonal factors
D) Deseasonalized trend components
Answer: B
Diff: 1

Keywords: ratio-to-moving-average
Objective: 16.4.1
108) ________ are obtained by averaging the ratio-to-moving-averages associated with each
season in the time series.
A) Seasonal factors
B) Dummy variables for seasonality
C) Normalized trend factors
D) Deseasonalized factors
Answer: A
Diff: 1
Keywords: seasonal factors
Objective: 16.4.1
109) The trend component for a time series with seasonality is found by performing a regression
analysis with
A) the actual time series as the dependent variable and the period number as the independent
variable.
B) the centered-moving-average as the dependent variable and the period number as the
independent variable.
C) the deseasonalized time series as the dependent variable and the period number as the
independent variable.
D) the actual time series as the independent variable and the period number as the dependent
variable.
Answer: C
Diff: 2
Keywords: trend component
Objective: 16.4.1
110) A large statistics class meets on Monday, Wednesday, and Friday each week during the
semester. The following data shows the number of absent students for the last nine classes.
Class
1
2
3
4
5
Day
Mon
Wed
Fri
Mon
Wed
Absent
5
3
7
5
4
Class
6
7
8
9
Day
Fri
Mon
Wed
Fri
Absent
9
6
4
11

The three-period centered moving average for Class 5 is ________.
A) 4.8
B) 5.3
C) 6.0
D) 7.0
Answer: C
Diff: 2
Objective: 16.4.1
Class
1
2
3
4
5
Day
Mon
Wed
Fri
Mon
Wed
Absent
5
3
7
5
4
Class
6
7
8
9
Day
Fri
Mon
Wed
Fri
Absent
9
6
4
11
The ratio-to-moving-average for Class 4 is ________.

A) 0.6667
B) 0.9434
C) 1.1403
D) 1.4262
Answer: B
Diff: 2
Objective: 16.4.1
Class
1
2
3
4
5
Day
Mon
Wed
Fri
Mon
Wed
Absent
5
3
7
5
4
Class
6
7
8
9
Day
Fri
Mon
Wed
Fri
Absent
9
6
4
11

The seasonal factor for Monday is ________.
A) 0.6127
B) 0.9479
C) 1.2268
D) 1.4143
Answer: B
Diff: 2
Keywords: seasonal factor
Objective: 16.4.1
Class
1
2
3
4
5
Day
Mon
Wed
Fri
Mon
Wed
Absent
5
3
7
5
4
Class
6
7
8
9
Day
Fri
Mon
Wed
Fri
Absent
9
6
4
11
The normalized seasonal factor for Friday is ________.

A) 0.6635
B) 0.9266
C) 1.2355
D) 1.4262
Answer: D
Diff: 2
Objective: 16.4.1
Class
1
2
3
4
5
Day
Mon
Wed
Fri
Mon
Wed
Absent
5
3
7
5
4
Class
6
7
8
9
Day
Fri
Mon
Wed
Fri
Absent
9
6
4
11
The deseasonalized number of absent students for Class 4 is ________.


A) 4.9
B) 5.2
C) 5.7
D) 6.1
Answer: B
Diff: 2
Keywords: deseasonalized time series
Objective: 16.4.1
Class
1
2
3
4
5
Day
Mon
Wed
Fri
Mon
Wed
Absent
5
3
7
5
4
Class
6
7
8
9
Day
Fri
Mon
Wed
Fri
Absent
9
6
4
11
The slope for the deseasonalized trend projection is ________.

A) 0.3117
B) 0.8554
C) 1.1660
D) 1.5396
Answer: A
Diff: 2
Keywords: slope for the deseasonalized trend projection
Objective: 16.4.1
Class
1
2
3
4
5
Day
Mon
Wed
Fri
Mon
Wed
Absent
5
3
7
5
4
Class
6
7
8
9
Day
Fri
Mon
Wed
Fri
Absent
9
6
4
11
The intercept for the deseasonalized trend projection is ________.

A) 2.1678

B) 3.0075
C) 4.3861
D) 5.9667
Answer: C
Diff: 2
Keywords: intercept for the deseasonalized trend projection
Objective: 16.4.1
Class
1
2
3
4
5
Day
Mon
Wed
Fri
Mon
Wed
Absent
5
3
7
5
4
Class
6
7
8
9
Day
Fri
Mon
Wed
Fri
Absent
9
6
4
11
The trend component for the forecast of absent students for Class 10 using multiplicative
decomposition is ________.
A) 6.6
B) 7.5
C) 8.2
D) 8.5
Answer: B
Diff: 2
Keywords: trend component, multiplicative decomposition
Objective: 16.4.1
Class
1
2
3
4
5
Day
Mon
Wed
Fri
Mon
Wed
Absent
5
3
7
5
4
Class
6
7
8
9
Day
Fri
Mon
Wed
Fri
Absent
9
6
4
11
The forecast of absent students for Class 10 using multiplicative decomposition is ________.
A) 6.0
B) 6.4

C) 7.2
D) 7.9
Answer: C
Diff: 2
Objective: 16.4.1
Class
1
2
3
4
5
Day
Mon
Wed
Fri
Mon
Wed
Absent
5
3
7
5
4
Class
6
7
8
9
Day
Fri
Mon
Wed
Fri
Absent
9
6
4
11
The mean absolute deviation for forecasting absent students using multiplicative decomposition
is ________.
A) 0.37
B) 2.30
C) 2.82
D) 3.33
Answer: A
Diff: 2
Keywords: multiplicative decomposition, mean absolute deviation
Objective: 16.4.1

Class
1
2
3
4
5
Day
Mon
Wed
Fri
Mon
Wed
Absent
5
3
7
5
4
Class
6
7
8
9
Day
Fri
Mon
Wed
Fri
Absent
9
6
4
11
The following dummy variables were created:

Day
Monday
Wednesday
Friday
SD1
0
0
1
SD2
0
1
0
The regression results are shown in the table below.
The forecast for the number of absent students for Class 10 using this model is ________.
A) 3.7
B) 4.3
C) 5.8
D) 7.3
Answer: D
Diff: 2
Keywords: dummy variables
Objective: 16.4.2

121) A large statistics class meets on Monday, Wednesday and Friday each week during the
Class
1
2
3
4
5
Day
Mon
Wed
Fri
Mon
Wed
Absent
5
3
7
5
4
Class
6
7
8
9
Day
Fri
Mon
Wed
Fri
Absent
9
6
4
11

Day
Monday
Wednesday
Friday
SD1
0
0
1
SD2
0
1
0
The mean absolute deviation for forecasting for the number of absent students using this model
is ________.
A) 0.27
B) 0.51
C) 1.09
D) 1.56
Answer: A
Diff: 2
Keywords: dummy variables, mean absolute deviation
Objective: 16.4.2

122) Chris is employed by Silver Lake Resort in Orlando, Florida, and sells timeshares. The
following table shows the number of timeshare sales for Chris for each quarter over the past
three years.
Period
1
2
3
4
5
6
Quarter
1
2
3
4
1
2
Sales
10
16
11
7
11
14
Period
7
8
9
10
11
12
Quarter
3
4
1
2
3
4
Sales
12
8
13
17
12
9
The four-period centered moving average for Period 7 is ________.

A) 11.5
B) 12.2
C) 12.7
D) 13.0
Answer: A
Diff: 2
Objective: 16.4.1
three years.
Period
1
2
3
4
5
6
Quarter
1
2
3
4
1
2
Sales
10
16
11
7
11
14
Period
7
8
9
10
11
12
Quarter
3
4
1
2
3
4
Sales
12
8
13
17
12
9
The ratio-to-moving-average for Period 4 is ________.

A) 0.6364
B) 0.9450
C) 1.2257
D) 1.5699
Answer: A
Diff: 2
Objective: 16.4.1

three years.
Period
1
2
3
4
5
6
Quarter
1
2
3
4
1
2
Sales
10
16
11
7
11
14
Period
7
8
9
10
11
12
Quarter
3
4
1
2
3
4
Sales
12
8
13
17
12
9
The seasonal factor for Quarter 2 is ________.

A) 0.7045
B) 0.9606
C) 1.2661
D) 1.3025
Answer: D
Diff: 2
Keywords: seasonal factor
Objective: 16.4.1
three years.
Period
1
2
3
4
5
6
Quarter
1
2
3
4
1
2
Sales
10
16
11
7
11
14
Period
7
8
9
10
11
12
Quarter
3
4
1
2
3
4
Sales
12
8
13
17
12
9
The normalized seasonal factor for Quarter 4 is ________.

A) 0.6493
B) 0.9057
C) 1.1366
D) 1.2867
Answer: A
Diff: 2
Objective: 16.4.1

three years.
Period
1
2
3
4
5
6
Quarter
1
2
3
4
1
2
Sales
10
16
11
7
11
14
Period
7
8
9
10
11
12
Quarter
3
4
1
2
3
4
Sales
12
8
13
17
12
9
The deseasonalized number of sales for Period 9 is ________.

A) 11.0
B) 11.5
C) 12.6
D) 13.3
Answer: C
Diff: 2
Keywords: deseasonalized time series
Objective: 16.4.1
three years.
Period
1
2
3
4
5
6
Quarter
1
2
3
4
1
2
Sales
10
16
11
7
11
14
Period
7
8
9
10
11
12
Quarter
3
4
1
2
3
4
Sales
12
8
13
17
12
9
The slope for the deseasonalized trend projection is ________.

A) 0.1337
B) 0.2517
C) 0.9412
D) 1.3788
Answer: B
Diff: 2
Keywords: slope for the deseasonalized trend projection
Objective: 16.4.1

three years.
Period
1
2
3
4
5
6
Quarter
1
2
3
4
1
2
Sales
10
16
11
7
11
14
Period
7
8
9
10
11
12
Quarter
3
4
1
2
3
4
Sales
12
8
13
17
12
9
The intercept for the deseasonalized trend projection is ________.

A) 5.6915
B) 7.7721
C) 8.0456
D) 10.0636
Answer: D
Diff: 2
Keywords: intercept for the deseasonalized trend projection
Objective: 16.4.1
three years.
Period
1
2
3
4
5
6
Quarter
1
2
3
4
1
2
Sales
10
16
11
7
11
14
Period
7
8
9
10
11
12
Quarter
3
4
1
2
3
4
Sales
12
8
13
17
12
9
The trend component for the forecast of sales for Period 13 using multiplicative decomposition is
________.
A) 11.4
B) 11.9
C) 13.3
D) 14.8
Answer: C
Diff: 2
Objective: 16.4.1

three years.
Period
1
2
3
4
5
6
Quarter
1
2
3
4
1
2
Sales
10
16
11
7
11
14
Period
7
8
9
10
11
12
Quarter
3
4
1
2
3
4
Sales
12
8
13
17
12
9
The sales forecast for Period 13 using multiplicative decomposition is ________.

A) 12.0
B) 13.7
C) 14.3
D) 14.9
Answer: B
Diff: 2
Objective: 16.4.1
three years.
Period
1
2
3
4
5
6
Quarter
1
2
3
4
1
2
Sales
10
16
11
7
11
14
Period
7
8
9
10
11
12
Quarter
3
4
1
2
3
4
Sales
12
8
13
17
12
9
The mean absolute deviation for forecasting timeshares sales using multiplicative decomposition
is ________.
A) 0.58
B) 1.36
C) 1.97
D) 3.07
Answer: A
Diff: 2
Keywords: multiplicative decomposition, mean absolute deviation
Objective: 16.4.1

three years.
Period
1
2
3
4
5
6
Quarter
1
2
3
4
1
2
Sales
10
16
11
7
11
14
Period
7
8
9
10
11
12
Quarter
3
4
1
2
3
4
Sales
12
8
13
17
12
9

Quarter
1
2
3
4
SD1
0
1
0
0
SD2
0
0
1
0
SD3
0
0
0
1
The regression results (with only the significant variables included) are shown in the table below.
The sales forecast Period 13 using this model is ________.

A) 10.6
B) 11.1
C) 11.8
D) 13.0
Answer: D
Diff: 2
Objective: 16.4.2

three years.
Period
1
2
3
4
5
6
Quarter
1
2
3
4
1
2
Sales
10
16
11
7
11
14
Period
7
8
9
10
11
12
Quarter
3
4
1
2
3
4
Sales
12
8
13
17
12
9

Quarter
1
2
3
4
SD1
0
1
0
0
SD2
0
0
1
0
SD3
0
0
0
1
The mean absolute deviation using this model is ________.

A) 0.27
B) 0.52
C) 1.89
D) 2.27
Answer: B
Diff: 2
Objective: 16.4.2

134) The following data represent the number of ceiling fans sold for each of the past five days
for a Home Depot store.
Day
1
2
3
4
5
Sales
11
7
15
10
6
Calculate the sales forecast for Day 6 using a two-period simple moving average.
Answer:
10 6
F6
8.0
2
Diff: 1
Objective: 16.2.1

Day
1
2
3
4
5
Sales
11
7
15
10
6
Calculate the mean absolute deviation for a two-period simple moving average.
Answer:
Day
1
2
3
4
5
Actual
Sales
Forecast
Sales
Forecasting
Error
At
11
7
15
10
6
Ft
At - F t
9.0
11.0
12.5
6.0
1.0
6.5
Absolute
Forecasting
Error
At Ft
6.0
1.0
6.5
A F
t
MAD
A F
t
13.5
13.5
4.5
3
Diff: 1
Objective: 16.2.1
136) Dr. Chris is a chiropractor and treats patients from her home office. The following data
represent the number of patients that Dr. Chris treated over the past six days.
Day
1
2
3
4
5
6
Patients
9
11
10
12
8
7
Calculate the patient forecast for Day 7 using a three-period simple moving average.
Answer:
12 8 7
F7
9.0
3
Diff: 1
Objective: 16.2.1
Day
1
2
3
4
5
6
Patients
9
11
10
12
8
7
Calculate the mean absolute deviation for a three-period simple moving average.
Answer:
Day
1
2
3
4
5
6
Actual
Patients
Forecast
Patients
Forecasting
Error
At
9
11
10
12
8
7
Ft
At - F t
10.0
11.0
10.0
2.0
3.0
3.0
Absolute
Forecasting
Error
At Ft
2.0
3.0
3.0
A F
t
MAD
A F
t
8.0
8.0
2.7
3
Diff: 1
Objective: 16.2.1
Day
1
2
3
4
5
Sales
11
7
15
10
6
Calculate the sales forecast for Day 6 using a two-period weighted moving average with weights
3 and 2.
Answer:
2 10 3 6 7.6
F6
3 2
Diff: 1
Objective: 16.2.1

Day
1
2
3
4
5
Sales
11
7
15
10
6
Calculate the mean absolute deviation for a two-period weighted moving average with weights 3
and 2.
Answer:
Day
1
2
3
4
5
Actual
Sales
Forecast
Sales
Forecasting
Error
At
11
7
15
10
6
Ft
At - F t
8.6
11.8
12.0
6.4
1.8
6.0
Absolute
Forecasting
Error
At Ft
6.4
1.8
6.0
A F
t
MAD
A F
t
14.2
14.2
4.7
3
Diff: 1
Objective: 16.2.1
Day
1
2
3
4
5
6
Patients
9
11
10
12
8
7
Calculate the patient forecast for Day 7 using a three-period weighted moving average with
weights 4, 2, and 1.
Answer:
4 7 2 8 1 12 8.0
F7
4 2 1
Diff: 1
Objective: 16.2.1

Day
1
2
3
4
5
6
Patients
9
11
10
12
8
7
Calculate the mean absolute deviation for a three-period weighted moving average with weights
4, 2, and 1.
Answer:
Day
1
2
3
4
5
6
Actual
Patients
Forecast
Patients
Forecasting
Error
At
9
11
10
12
8
7
Ft
At - F t
10.1
11.2
9.4
1.9
3.3
2.4
Absolute
Forecasting
Error
At Ft
1.9
3.3
2.4
A F
t
MAD
A F
t
7.6
7.6
2.5
3
Diff: 1
Objective: 16.2.1

Day
1
2
3
4
5
Sales
11
7
15
10
6
Calculate the sales forecast for Day 6 using exponential smoothing with = 0.2.
Answer:
Day
1
2
3
4
5
Actual
Sales
At
11
7
15
10
6
Forecast
Sales
Ft
11.0
11.0
10.2
11.2
11.0
F6 F5 A5 F5
F6 11.0 0.2 6 11.0 10.0
Diff: 1
Objective: 16.2.1

Day
1
2
3
4
5
Sales
11
7
15
10
6
Calculate the mean absolute deviation for exponential smoothing with = 0.2.
Answer:
Day
1
2
3
4
5
Actual
Sales
Forecast
Sales
Forecasting
Error
At
11
7
15
10
6
Ft
11.0
11.0
10.2
11.2
11.0
At - F t
Absolute
Forecasting
Error
At Ft
4.0
4.8
1.2
5.0
4.0
4.8
1.2
5.0
A F
t
MAD
A F
t
15.0
15.0
3.8
4
Diff: 1
Objective: 16.2.1

Day
1
2
3
4
5
6
Patients
9
11
10
12
8
7
Calculate the sales forecast for Day 7 using exponential smoothing with = 0.5.
Answer:
Day
1
2
3
4
5
6
Actual
Patients
At
9
11
10
12
8
7
Forecast
Patients
Ft
9.0
9.0
10.0
10.0
11.0
9.5
F7 F6 A6 F6
F7 9.5 0.5 7 9.5 8.3
Diff: 1
Objective: 16.2.1

Day
1
2
3
4
5
6
Patients
9
11
10
12
8
7
Calculate the mean absolute deviation for exponential smoothing with = 0.5.
Answer:
Day
1
2
3
4
5
6
Actual
Patients
Forecast
Patients
Forecasting
Error
At
9
11
10
12
8
7
Ft
9.0
9.0
10.0
10.0
11.0
9.5
At - F t
Absolute
Forecasting
Error
At Ft
2.0
0.0
2.0
3.0
2.5
2.0
0.0
2.0
3.0
2.5
A F
t
MAD
A F
t
9.5
9.5
1.9
5
Diff: 1
Objective: 16.2.1

Day
1
2
3
4
5
Sales
11
7
15
10
6
Calculate the sales forecast for Day 6 using exponential smoothing with trend adjustment with
= 0.7 and = 0.4.
Answer:
Day
t
1
2
3
4
5
Actual
Sales
At
11
7
15
10
6
Smoothed
Forecast
Ft
11.0
11.0
8.2
12.6
11.1
Trend
Tt
0
0
-1.1
1.1
0.1
Forecast
w/Trend
FITt
11.0
11.0
7.1
13.7
11.2
F6 FIT5 A5 FIT5
F6 11.2 0.7 6 11.2 7.6
T6 F6 F5 1 T5
T6 0.4 7.6 11.1 1 0.4 0.1 1.3
FIT6 F6 T6
FIT6 7.6 1.3 6.3
Diff: 2
Objective: 16.2.1

Day
1
2
3
4
5
Sales
11
7
15
10
6
Calculate the mean absolute deviation using exponential smoothing with trend adjustment with
= 0.7 and = 0.4.
Answer:
Day
Actual
Sales
Smoothed
Forecast
Trend
Forecast
w/Trend
t
1
2
3
4
5
At
11
7
15
10
6
Ft
11.0
11.0
8.2
12.6
11.1
Tt
0
0
1.1
1.1
0.1
FITt
11.0
11.0
7.1
13.7
11.2
---4.0
7.9
3.7
5.2
A FIT
t
MAD
A FIT
t
Absolute
Error
At FITt
20.8
20.8
5.2
4
Diff: 2
Objective: 16.2.1

Day
1
2
3
4
5
6
Patients
9
11
10
12
8
7
Calculate the patient forecast for Day 7 using exponential smoothing with trend adjustment with
= 0.7 and = 0.8.
Answer:
Day
t
1
2
3
4
5
6
Actual
Patients
At
9
11
10
12
8
7
Smoothed
Forecast
Ft
9.0
9.0
9.8
10.2
11.2
10.5
Trend
Tt
0
0
0.6
0.4
0.9
-0.4
Forecast
w/Trend
FITt
9.0
9.0
10.4
10.6
12.1
10.1
F7 FIT6 A6 FIT6
F7 10.1 0.4 7 10.1 8.9
T7 F7 F6 1 T6
T7 0.8 8.9 10.5 1 0.8 0.4 1.4
FIT7 F7 T7
FIT7 8.9 1.4 7.5
Diff: 2
Objective: 16.2.1

Day
1
2
3
4
5
6
Patients
9
11
10
12
8
7
Calculate the mean absolute deviation using exponential smoothing with trend adjustment with
= 0.7 and = 0.8.
Answer:
Day
Actual
Patients
Smoothed
Forecast
Trend
Forecast
w/Trend
t
1
2
3
4
5
6
At
9
11
10
12
8
7
Ft
9.0
9.0
9.8
10.2
11.2
10.5
Tt
0
0
0.6
0.4
0.9
0.4
FITt
9.0
9.0
10.4
10.6
12.1
10.1
---2.0
0.4
1.4
4.1
3.1
A FIT
t
MAD
A FIT
t
Absolute
Error
At FITt
11.0
11.0
2.2
5
Diff: 2
Objective: 16.2.1

150) The following data represent the number of car accidents per month in the town of Darby
over the past seven months.
Month
Accidents
1
10
2
8
3
12
4
8
5
6
6
5
7
5
Forecast the number of accidents in Month 8 using trend projection.

Answer:
Month
t
1
2
3
4
5
6
7
t 28
b1
Accidents
y
10
8
12
8
6
5
5
y 54
ty
10
16
36
32
30
30
35
ty 189
t2
1
4
9
16
25
36
49
2
t 140
n ty t y
n t 2 t
b1
7 189 28 54
2
7 140 28
b0
y b t
n
1,323 1,512
0.9643
980 784
54
28
0.9643
7
7
b0 7.7143 3.8572 11.5715
b0
$
y 8 11.5715 0.9643t
$
y 8 11.5715 0.9643 8 3.9
Diff: 1
Objective: 16.3.1

151) The following data represent the number of car accidents per month in the town of Darby
over the past seven months.
Month
Accidents
1
10
2
8
3
12
4
8
5
6
6
5
7
5
Calculate the mean absolute deviation using the trend projection forecasting technique.
Answer:
Month
Actual
Accidents
Forecast
Accidents
$
yt
Forecasting
Error
Absolute
Forecasting
Error
y $
y
yt $
yt
yt
t
1
2
3
4
5
6
7
10
8
12
8
6
5
5
10.6
9.6
8.7
7.7
6.7
5.8
4.8
0.6
1.6
3.3
0.3
0.7
0.8
0.2
0.6
1.6
3.3
0.3
0.7
0.8
0.2
y $y
t
y $
y
MAD
t
7.5
1.07
7
Diff: 1
Keywords: trend projection, mean absolute deviation
Objective: 16.3.1
7.5

152) Bright Horizons operates a day care center for employees who work at the Hartfield Office
Complex. The following data shows the number of children that came to the day care over the
past six days.
Day
Children
1
11
2
14
3
11
4
18
5
16
6
21
Forecast the number of children using the day care center on Day 7 with trend projection.
Answer:
Day
t
1
2
3
4
5
6
t 21
b1
Children
y
11
14
11
18
16
21
y 91
ty
11
28
33
72
80
126
ty 350
t2
1
4
9
16
25
36
2
t 91
n ty t y
n t 2 t
b1
6 350 21 91
2
6 91 21
b0
y b t
2,100 1,911
1.80
546 441
91
21
b0 1.80
6
6
b0 15.1667 6.30 8.6667
n
$
y 7 8.6667 1.80t
$
y 7 8.6667 1.80 7 21.5
Diff: 1
Objective: 16.3.1

153) Bright Horizons operates a day care center for employees who work at the Hartfield Office
Complex. The following data shows the number of children that came to the day care over the
past six days.
Day
Children
1
11
2
14
3
11
4
18
5
16
6
21
Calculate the mean absolute deviation using the trend projection forecasting technique.
Answer:
Month
Actual
Children
Forecast
Children
$
yt
Forecasting
Error
Absolute
Forecasting
Error
y $
y
yt $
yt
yt
t
1
2
3
4
5
6
11
14
11
18
16
21
10.7
12.5
14.3
16.1
17.9
19.7
0.3
1.5
3.3
1.9
1.9
1.3
0.3
1.5
3.3
1.9
1.9
1.3
y $y
t
y
MAD
$
yt
10.2
1.70
6
Diff: 1
Objective: 16.3.1
10.2

154) The following data represent the number of students who went to the University Walk-In
Clinic for medical attention on campus during the past 15 days.
Day
1
2
3
4
5
6
7
8
Students
17
11
18
12
14
14
8
11
Day
9
10
11
12
13
14
15
Students
10
13
13
12
9
12
10
Forecast the number of students who will use the walk-in clinic on Day 16 with trend projection.
Answer:
Day
t
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
t 120
Students
y
17
11
18
12
14
14
8
11
10
13
13
12
9
12
10
y 184
ty
17
22
54
48
80
84
56
88
90
130
143
144
117
168
150
ty 1,381
t2
1
4
9
16
25
36
49
64
81
100
121
144
169
196
225
2
t 1, 240

b1
n ty t y
n t 2 t
b1
15 1,381 120 184

2
15 1, 240 120
b0
y b t
n
20,175 22.080
0.3250
18, 600 14, 400
184
120
0.3250
15
15
b0 12.2667 2.60 14.8667
b0
$
y16 14.8667 0.325t
$
y16 14.8667 0.325 16 9.7
Diff: 1
Objective: 16.3.1

Day
1
2
3
4
5
6
7
8
Students
17
11
18
12
14
14
8
11
Day
9
10
11
12
13
14
15
Students
10
13
13
12
9
12
10
Calculate the mean absolute deviation for the number of students who will use the walk-in clinic
with trend projection.
Answer:
Month
Actual
Students
Forecast
Students
$
yt
t
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Forecasting
Error
Absolute
Forecasting
Error
y $
y
yt $
yt
yt
17
11
18
12
14
14
8
11
10
13
13
12
9
12
10
14.5
14.2
13.9
13.6
13.2
12.9
12.6
12.3
11.9
11.6
11.3
11.0
10.6
10.3
10.0
2.5
3.2
4.1
1.6
0.8
1.1
4.6
1.3
1.9
1.4
1.7
1.0
1.6
1.7
0.0
2.5
3.2
4.1
1.6
0.8
1.1
4.6
1.3
1.9
1.4
1.7
1.0
1.6
1.7
0.0
y $y
t
28.5
y
MAD
$
yt
28.5
1.90
15
Diff: 1
Objective: 16.3.1

Day
1
2
3
4
5
6
7
8
Students
17
11
18
12
14
14
8
11
Day
9
10
11
12
13
14
15
Students
10
13
13
12
9
12
10
Test this time series for positive autocorrelation using = 0.05.

Answer:

n
e e
t 1
t 2
e
t 1
2
t
199.87
2.65
75.47
d L 1.08
dU 1.36
d dU
Because
, we fail to reject the null hypothesis and conclude that positive autocorrelation
is not present in the time series.
Diff: 2
Objective: 16.3.1

157) Katie is a waitress at the Princeton Restaurant and works on Thursday, Friday, and Saturday
nights. The following table shows the number of customers that she served during the past nine
nights on her schedule.
Period
1
2
3
4
5
Day
Thurs
Fri
Sat
Thurs
Fri
Customers
25
24
30
17
18
Period
6
7
8
9
Day
Fri
Thurs
Fri
Sat
Customers
26
14
14
10
Use multiplicative decomposition to forecast the number of customers that Katie will serve in
Period 10.
Answer:
Period
1
2
3
4
5
6
7
8
9
Day
Thurs
Fri
Sat
Thurs
Fri
Sat
Thurs
Fri
Sat
yt
25
24
30
17
18
26
14
14
10
3-Period
Centered
Moving
Average
Ratio-toMovingAverage
26.3
23.7
21.7
20.3
19.3
18.0
12.7
0.9125
1.2658
0.7834
0.8867
1.3472
0.7778
1.1024
The seasonal factors for each semester are:

Thursday
0.7834
0.7778
Average
0.7806
Total = 3.0543
Friday
0.9125
0.8867
1.1024
0.9672
Saturday
1.2658
1.3472
1.3065
Because this total does not equal 3, we need to normalize the seasonal factors as follows:

3
SFThurs 0.9822 0.7806 0.7667
3.0543
3
SFFri 0.9822 0.9672 0.9500

3.0543
3
SFSat 0.9822 1.3065 1.2832

3.0543
Total 2.9999
NSFThurs
NSFFri
NSFSat
Period
1
2
3
4
5
6
7
8
9
Day
Thurs
Fri
Sat
Thurs
Fri
Sat
Thurs
Fri
Sat
yt
25
24
30
17
18
26
14
14
10
Seasonal
Component Deseasonalized
St
Customers
0.7667
32.6
0.9500
25.3
1.2833
23.4
0.7667
22.2
0.9500
18.9
1.2833
20.3
0.7667
18.3
0.9500
14.7
1.2833
7.8
Using Excel to identify the regression coefficients with the deseasonalized customers as the
dependent variable and the period as the independent variable provides the following results:
The trend component is found with the following regression equation:
Tt 32.3139 2.3850t
The forecast for the Period 10 is:
F10 T10 S10
T10 32.3139 2.3850 10 8.5

S10 SThurs 0.7667
F10 8.5 0.7667 6.5
Diff: 3
Objective: 16.4.1
158) Katie is a waitress at the Princeton Restaurant and works on Thursday, Friday, and Saturday

nights. The following table shows the number of customers that she served during the past nine
nights on her schedule.
Period
1
2
3
4
5
Day
Thurs
Fri
Sat
Thurs
Fri
Customers
25
24
30
17
18
Period
6
7
8
9
Day
Fri
Thurs
Fri
Sat
Customers
26
14
14
10
Forecast the number of customers that Katie will serve in Period 10 using multiple regression
with dummy variables for seasonality.
Answer:
Define the following dummy variables:
Day
Thursday
Friday
Saturday
SD1
0
0
1
SD2
0
1
0
Using the best subsets regression in PHStat2 with this data, we have the following choices of
models.
The model X1X2 would be the most appropriate choice. The results of this model are:
The final forecasting equation is:
Ft 28.6396 2.2162t 6.6577 SD1

The forecast for Period 10 would be:
Ft 28.6396 2.2162 10 6.6577 0 6.5

Diff: 2
Keywords: multiple regression, dummy variables, seasonality
Objective: 16.4.2

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Business Statistics (Donnelly)

Chapter 14 Correlation and Simple Linear Regression

Correlation and Simple Linear Regression 14-2

Correlation and Simple Linear Regression 14-3

Copyright 2015 Pearson Education, Inc.

Correlation and Simple Linear Regression 14-4

Copyright 2015 Pearson Education, Inc.

Correlation and Simple Linear Regression 14-5

Copyright 2015 Pearson Education, Inc.

Correlation and Simple Linear Regression 14-6

Copyright 2015 Pearson Education, Inc.

Correlation and Simple Linear Regression 14-7

Copyright 2015 Pearson Education, Inc.

Correlation and Simple Linear Regression 14-8

Copyright 2015 Pearson Education, Inc.

Correlation and Simple Linear Regression 14-9

. The value for b in this

. The value for a in this

Correlation and Simple Linear Regression 14-10

Copyright 2015 Pearson Education, Inc.

Correlation and Simple Linear Regression 14-11

The correlation coefficient for this data is ________.

Correlation and Simple Linear Regression 14-12

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Correlation and Simple Linear Regression 14-13

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Correlation and Simple Linear Regression 14-14

Correlation and Simple Linear Regression 14-15

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Correlation and Simple Linear Regression 14-16

Correlation and Simple Linear Regression 14-17

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Correlation and Simple Linear Regression 14-18

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Correlation and Simple Linear Regression 14-19

Copyright 2015 Pearson Education, Inc.

Correlation and Simple Linear Regression 14-20

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Correlation and Simple Linear Regression 14-21

Copyright 2015 Pearson Education, Inc.

Correlation and Simple Linear Regression 14-22

Copyright 2015 Pearson Education, Inc.

Correlation and Simple Linear Regression 14-23

Copyright 2015 Pearson Education, Inc.

Correlation and Simple Linear Regression 14-24

Copyright 2015 Pearson Education, Inc.

Correlation and Simple Linear Regression 14-25

Copyright 2015 Pearson Education, Inc.

Correlation and Simple Linear Regression 14-26

Copyright 2015 Pearson Education, Inc.

Correlation and Simple Linear Regression 14-27

The correlation coefficient for this data is ________.

Correlation and Simple Linear Regression 14-28

Copyright 2015 Pearson Education, Inc.

Correlation and Simple Linear Regression 14-29

Copyright 2015 Pearson Education, Inc.

Correlation and Simple Linear Regression 14-30

Copyright 2015 Pearson Education, Inc.

Correlation and Simple Linear Regression 14-31

Copyright 2015 Pearson Education, Inc.

Correlation and Simple Linear Regression 14-32

Copyright 2015 Pearson Education, Inc.

Correlation and Simple Linear Regression 14-33