THE COPPERBELT UNIVERSITY

SCHOOL OF BUSINESS

TUTORIAL SHEET ON INDEX NUMBERS, CHI-SQUARE, ANOVA AND REGRESSION

QUESTION ONE

Random samples of seven freshmen, seven sophomores and seven juniors taking a business statistics
class were drawn. The accompanying table shows the scores on a final examination.

Freshmen Sophomores Juniors

82 71 64
93 62 73
61 85 87
74 94 91
69 78 56
70 66 78
53 71 87

a. Test at significance level 5% the null hypothesis that the three population mean scores are
equal.
b. Is there need for further analysis?

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 QUESTION TWO
The following is an ANOVA table.

Source of Variation Sum of Squares Degrees of Freedom

Between groups 1 000 4
Within groups 750 15
Total 1 750 19
a. Compute Mean squares for between groups and within groups.
b. Compute the F- statistic and test the hypothesis that the group means are equal.

QUESTION THREE

i) Define an index number

Suppose the government wishes to compare the cost of family food buying over years. A
basket of five food items is used: meat, eggs, coffee, beer and cheese for years 2015 and 2016.

ITEM PRICE QUANTITY

2015 2016 2015 2016
MEAT 314 337 45 48
EGGS 145 156 60 54
COFFEE 215 207 42 48
TEA 157 165 54 50
CHEESE 468 465 49 52

Using 2015 as the base year

ii) Compute the Laspeyres and Paasche price Indexes for 2016

ii) Compute the Fishers’ price Index for 2016

iii) Briefly explain four factors to consider when constructing index numbers

iv) What do you understand by a base period.

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 QUESTION FOUR

A study was made by a retail merchant to determine the relation between weekly advertising
expenditure and sales.

Advertising Cost Sales

40 385
20 400
25 395
20 365
30 475
50 440
40 490
20 420
50 560
40 525
25 480
50 510
a. Plot a scatter diagram.
b. Find the equation of regression line to predict weekly sales.
c. Estimate the weekly sales when advertising costs are K35.
d. Conduct an ANOVA analysis to test the hypothesis 𝛽 = 0 at significance level 5%.
e. Compute the coefficient of determination. What do we learn from it concerning this
data?

QUESTION FIVE

Sales of products for the past 12 months are shown below.

Month Jan Feb March April May June July Aug Sept Oct Nov Dec
Sales 89 74 92 123 102 139 152 128 183 148 166 179

a) Find the equation of regression line

b) Use linear regression to forecast sales for the next three months.
c) Conduct an ANOVA analysis to test the hypothesis 𝛽 = 0 at significance level 5%.
d) Compute the coefficient of determination. How reliable is the forecasting?

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 QUESTION SIX

a) In a study to determine whether there is a relationship between the degrees held by the
employees of a large business firm and the salaries earned by these employees, a random
sample of size n= 500 yielded the results shown in the following table

Salary Low Average High

Master's degree 36 128 124
Bachelor's degree 30 70 44
High school diploma 15 34 19

Use the 0.05 level of significance to test if there is no relationship between degrees held and the
salaries earned by these employees. [12 marks]

b) GOODNESS-OF-FIT TEST FOR A POISSON DISTRIBUTION

An analysis of the number of goals scored by Nkana football club gave the following results:

Goals 0 1 2 3 4 5 6 7
per
match
(X)
No. of 14 18 29 18 10 7 3 1
matches

a) Carry out a 𝜒 2 goodness of fit test at the 10% significance level to determine whether or not the
above distribution can be reasonably modeled by a Poisson distribution with parameter 𝜇 = 2.

b) Can the data be modeled by a Poisson distribution having the same mean as the observed data?

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