Business Statistics

Sample Questions for final

BINOMIAL

I. (23%) In the past year, 40% of businesses have eliminated some of

their jobs. Assuming that the number of such businesses follows a
binomial distribution, find the probability that, among 10 businesses:
a. At least 3 businesses have eliminated some of their jobs.
b. None have eliminated some of their jobs last year.

II. According to the Vehicles Transportation Manual, 10% of the cars in the
U.S. are 12 years old. In a random sample of 10 cars, find the probability
a. That at least 5 cars are 12 years old.
b. That at most 8 cars are 12 years old.
c. That between 3 and 9 cars are 12 years old.
d. That anywhere from 3 to 9 cars are 12 years old.
e. That all of the cars in this sample are not 12 years old.

III. (24%) The United States Postal Service reports that 95% of first class
mail, in the same city, is delivered within 2 days of the time of mailing.
Eight letters are randomly sent (in the same city) to different locations.
a. What is the probability that all eight arrive within 2 days?
b. What is the probability that at most 2 arrive within 2 days?
c. What is the probability that at most 5 don’t arrive within 2 days?
d. Compute the mean and variance of the number of letters that will
arrive within 2 days.

IV. (16%) Consider the binomial experiment of randomly guessing at a 10

question multiple-choice test with 5 choices for each question. Find
a. The probability of guessing at least 6 correct answers.

b. The probability of guessing exactly 6 wrong answers.

c. The probability of guessing all wrong answers is:

V. (8%) Five Percent of the pins in a certain shipment are defective. If 10

pins are randomly picked from this shipment, what is the probability that:
1. None of them will be defective?
A. 0.599 B. 0.401 C. 0.00 D. 1.00

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 2. At most 2 will be defective?
A. 0.010 B. 0.075 C. 0.989 D. 0.925
3. What is the expected number of defective pins among these 10?
A. 5 B. 0.5 C. 1 D. 1.5

NORMAL + SAMPLING
I. Let X be a normally distributed random variable with  = 10 & = 3.
a. Evaluate each of the following probabilities:
P(2.35 < X < 5.05), P(3.01 < X < 15.88), and P(X < 2.29).
b. Find the value of a in each of the following cases:
P(X < a) = 0.975, P(X > a) = 0.975, and P(-a < Z < a) = 0.7062.

II. A well-known brand of size D batteries has a life time that is normally
distributed with a mean µ = 105 hours and a deviation σ = 20 hours.
a. What proportion of these batteries has a life time of less than 95 hours?
b. If a person buys a battery of this type, what is the probability
that its life time would be between:
1. 70 and 90 hours? 2. 70 and 105 hours? 3. 90 and 125 hours?
c. Find a value a such that 89.97% of the batteries of this type will have
a life time of more than a hours.

III. Suppose X is a normally distributed random variable.

a. Determine  if 2 = 81 and 13.35% of the area under the normal curve
lies to the right of 89.99.
b. Determine if  = 19 and 6.06% of the area under the normal curve lies
to the left of 14.35.

IV. (15%) The average weight of a student at AUL is assumed to be normally

distributed, with a mean of 65 kg, and a standard deviation of 5 kg. Find:
a. The probability of randomly selecting a student heavier than 60 kg?
b. The probability that a random sample of 36 students has an average
less than 63 kg?
c. The probability that the total weight of 64 students is between 4096
and 4192 kg?

V. (20%) The weight of an airline passenger’s suitcase is normally distributed

with an average of 45 pounds and a standard deviation of 2 pounds.
a. What is the probability that a suitcase weighs more than 42.5 pounds?
b. What is the probability that the average weight of 16 suitcases exceeds 42.5?
c. What is the probability that the total weight of these 16 suitcases is > 752.
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 d. If 10.2% of all suitcases are overweight, find the maximum weight allowed.
VI. (17%) A vending machine pours a soft drink (normally) into plastic bottles,
of capacity 320 ml. If the mean amount discharged is 300 ml with a
standard deviation of 10, find:
a. The probability that a bottle, filled by this machine, will contain
between 290 ml and 310 ml.
b. The probability that the average content of 25 bottles, filled by this
machine, will be between 290 ml and 310 ml.
c. The probability that the average content of 25 bottles, filled by this
machine, will be between 295 ml and 305 ml.
d. How many bottles might overflow in the next 10,000 ones?
e. The volume V such that the probability is 0.9564 that the average
content of 36 bottles is greater than V.

Confidence Intervals

I. In order to estimate the average amount of food expenditures per week for
a family of 4, a random sample of different families is chosen and its mean
was found to be $50. Construct a confidence interval in each of the
following cases:
a. n = 49 and  = 5, at the 90% confidence level.
b. n = 25 and s = 5, at the 95% confidence level.

II. A prospective purchaser of a fast food franchise is told that the daily
earnings for the franchise have a standard deviation of $90 a day. The
purchaser wishes to estimate the actual average daily earnings to within $20
with a probability of at least 0.95. How large a sample should he choose, if
such earnings are normally distributed?

III. The average cost of living for a husband and wife living in the Beirut area
follows a normal distribution. An official wants to estimate the true average
with a 95% confidence. He considers a sample of 35 citizens and finds their
mean to be L.L.500,000with a standard deviation of L.L.100,000. Construct
the required interval for this official.
IV. Professor Brown, a first-year math teacher at M.T.U. wants to estimate the
average time spent by his students doing their homework each night. He
randomly selects 20 students and finds that the mean and the standard
deviation of the time period spent (by these students) are 2.3 and 0.7 hours
respectively. Assuming that the population of study time is normal, construct:

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 a. A 95% confidence interval for the mean amount of time spent studying
each night for all students.
b. If it is known that σ = 1, what would your 95% interval become?

V. The mean length of a small balance bar is 43 millimeters. The production

manager is suspecting that the adjustments of the machine producing the
bars have changed. He selects a sample of 12 bars and measures each.
The results are as follows:
42 39 42 45 43 40 39 41 40 42 43 42
a. Construct a 95% confidence interval for the mean of such balance bars.
b. Is it reasonable to conclude that there has been a change in the mean
length of the bars at this level of confidence?

Hypothesis Testing

State the null and alternative hypotheses for the following 3 conjectures:
I. A researcher thinks that if expectant mothers use vitamin pills, the
birth weight of the babies will increase. The average birth weight of
the population is 8.6 pounds.
II. An engineer hypothesizes that the mean number of defects can be
decreased in a manufacturing process of compact disks by using
robots instead of humans for certain tasks. The mean number of
defective disks per 1000 is 18.

III. A psychologist feels that playing soft music during a test will change
the results of the test. The psychologist is not sure whether the grades
will be higher or lower. In the past, the mean of the scores was 73.

IV. A researcher claims that the average cost of men’s athletic shoes is less
than $80. He selects a random sample of 36 pairs of shoes from a catalog
and finds that x́ = $71. Is there enough evidence to support the researcher’s
claim at the 0.10 level of significance? Assume σ = 19.2.

V. A medical investigation claims that the average number of infections

per week at a hospital in southwestern Pennsylvania is 16.3. A random
sample of 10 weeks had a mean number of 17.7 infections. The sample
standard deviation is 1.8. Is there enough evidence to reject the
investigator’s claim at α = 0.05?

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Answers
BINOMIAL

I/pg. 1 n = 10, p = 0.4

a. P(x ≥ 3) = 0.833 b. P(x = 0) = 0.006

II/pg. 1 n = 10, p = 0.1

a. P(x ≥ 5) = 0.001 b. P(x ≤ 8) = 1 c. P(3 < x < 9) = 0.013
d. P(3 ≤ x ≤ 9) = 0.07 e. P(x = 0) = 0.349

III/pg. 1 n = 8, p = 0.95
a. P(x = 8) = 0.663 b. P(x ≤ 2) = 0
c. P( x́ ≤ 5) = P(x ≥ 3) = 1 d. µ = np = 7.6, σ2 = npq = 0.38

IV/pg. 1 n = 10, p = 1/5 = 0.2

a. P(x ≥ 6) = 0.007 b. P( x́ = 6) = P(x = 4) = 0.088
c. P(x = 0) = 0.107

V/pg. 1 n = 10, p = 0.05

1. 0.599 (A) 2. 0.989 (C) 3. E(X) = 0.5 (B)

NORMAL + SAMPLING

I/pg. 2 Normal µ = 10, σ = 3

a.0.0441 0.9651 0.0051
b. 1.96 -1.96 ±1.05

II/pg. 2 Normal µ = 105, σ = 20

a. 0.3085 b. (1): 0.1865, (2): 0.4599, and (3): 0.6147
c. a = 79.4 hours.

III/pg. 2 Normal
a. µ = ??, σ = 9 and P(x > 89.99) = 0.1335. Look for Z where
P(Z > z0) = 0.1335  P(Z < z0) = 0.8665  z0 = 1.11 (Table)
89.99−μ
1.11 = 9
 µ = 80
b. µ = 19, σ = ? and P(x < 14.35) = 0.0606. Look for Z where
14.35−19
P(Z < ?) = 0.0606  Z = -1.55 = 9
 σ = 3.

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IV/pg. 2 Normal µ = 65, σ = 5
a. P(x > 60) = 1- P(x < 60) = 1 – P(Z < -1) = 1 – 0.1587 = 0.8413
63−65
b. P( x́ < 63) =P(Z < 5 ) = P(Z < -2.4) = 0.0082.
√36
64−65 65.5−65
c. P(4096 < ∑ x < 4192) = P(64 < x́ < 65.5) = P( 5 < Z < 5 )
√ 64 √ 64
= P(-1.6 < Z < 0.8) = P(0.8) – P(-1.6) = 0.7333.

V/pg. 2 Normal µ = 45, σ = 2

a. P(x > 42.5) = P(Z > -1.25) = 1 – P(-1.25) = 0.8944
42.5−45
b. P( x́ > 42.5) = P(Z > 2 ) = P(Z > -5) = 1.
√ 16
c. P(∑ x > 752) = P( x́ > 47) = P(Z > 4) ≈ 0
d. P(x > ?) = 0.102 Look for Z where P(Z > ?) = 0.102 
1 – P(Z) = 0.102  P(Z) = 0.898, hence Z = 1.27 (Table)
x−45
 1.27 = 2
 x = 47.54 kgs.

VI/pg. 3 Normal µ =300, σ = 10 (Cup capacity = 320 cc)

a. P(290 < x < 310) = 0.6826 b. P(290 < x́ < 310) = 1
c. P(295 < x́ < 305) = 0.9876 d. # of cups = 10000× P(x > 320)
= 10000× P(Z > 2) = 10000 (0.0228) = 228 bottles
e. P( > V) = 0.9564 Look for Z where P(Z > ?) = 0.9564 
x́
V −300
1 - P(Z)= 0.9564 Table gives Z = -1.71 = 10  V = 297.15 cc.
√ 36

Confidence Intervals

I/pg. 3 a. n = 49, σ = 5, 90% confidence  Z0.90 = 1.645

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90% C. I. for µ is: 50 ± 1.645 = (48.825, 51.175)
√ 49
b. n = 25, s = 5, 95% confidence  24t0.95 = 2.064
95% C. I. for µ is: 50 ± 2.064 = (47.936, 52.064)

II/pg. 3 Estimation Error ≤ 20, 95% confidence  Z0.95 = 1.96

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 σ
Thus Z ≤ 20  √ n ≥ 8.82  n ≥ 78.
√n
100000
III/pg. 3 500000 ± 1.96 = (466870, 533130)
√35

IV/pg. 3 a. n = 20, x́ = 2.3, and s = 0.7 at 95% confidence  19t0.95 = 2.093

0.7
95% C. I. for µ is: 2.3 ± 2.093 = (1.97, 2.63)
√ 20
b. If σ is known, we use Z, the above 95% confidence interval becomes
1
2.3 ± 1.96 = (1.86, 2.74)
√ 20
V/pg. 4 a. n = 12, x́ = 41.5, and s = 1.78 (by calculator) at 95% confidence 
1.78
t
11 0.95 = 2.201  95% C. I. for µ is: 41.5 ± 2.201 = (40.26, 42.74)
√ 10
b. Yes there seems to be a change, µ was 43 which is not in the above
confidence interval.

Hypothesis Testing
I. Solution:
H0: µ = 8.6 and H1: µ > 8.6

II. Solution:
H0: µ = 18 and H1: µ < 18

III. Solution:
H0: µ = 73 and H1: µ ≠ 73

IV. Solution:
H0: µ = 80 and H1: µ < 80 (Claim)
The critical value for α = 0.10 is Zc =1.282 one-tailed test. (n = 36  Z not t)
x́−μ
The test value Z = σ gives Z = -2.81
√n
Since |Z| > Zc, we reject H0  accept the researcher’s claim.

V. Solution:
H0: µ = 16.3 and H1: µ ≠ 16.
n = 10, x́ = 17.7 infections, and s = 1.8 we use t (2-tailed testing).

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 17.7−16.3
Since calculated t = 1.8 = 2.46 > tc = 2.262, we reject H0: µ = 16.3
√ 10