A SAMPLE TEST OF BUSINESS STATISTICS (120 MINUTES)

STUDENT NAME: STUDENT ID:

PART 1: MULTIPLE CHOICE. Choose the one alternative that best answers the question.
1) A population has groups that have a small amount of variation within them, but large variation among
or between the groups themselves. The proper sampling technique is

A) simple random. B) stratified.

C) cluster. D) judgment.

(*stratified sampling is used when groups have small variation needs to be performed)

2) The distribution pictured below is

A) bimodal and skewed right. B) bimodal and skewed left.

C) skewed right. D) skewed left.

(*2 peak  bimodal ; tail is longer on the left  skewed right).

3) Bob found an error in the following frequency distribution. What is it?

Class Frequency
  1–10    2  
  11–20    6  
  25–30    8  
  31–40    12  
  44–50    6  

A) The class limits are overlapping too much.

B) The classes are not collectively exhaustive.
C) There are too many classes by Sturges' Rule.
D) The first class must start at 0.
(*Events are collectively exhaustive if their union is the entire sample space S, union of classes is the
entire space S)

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4) Below is a sorted stem-and-leaf diagram for the measured speeds (miles per hour) of 49 randomly
chosen vehicles on highway I-80 in Nebraska. How many vehicles were traveling exactly the speed limit
(70 mph)?
       
Stem unit = 10 
Leaf unit = 1 
       
Frequency Stem Leaf
  1 4 9
  1 5 5
  17 6 01222455556688999
  19 7 0111233345666778999
  7 8 0133557
  4 9 0122
  49    
A) 0 B) 1
C) 19 D) Impossible to tell

5) Shown the spending by a sample of 50 breakfast customers of McDonald's. Which statement is least
likely to be correct?
 

A) The median is very close to the midhinge. (midhinge = (Q1 + Q3)/2 = 5)

B) The median purchase is slightly less than $5.
C) About 75 percent of the customers spend less than $7.
D) The mean is a reasonable measure of center.

(*Min = 0; Q1 = 3; Q2 = 5; Q3 = 7; Max = 13; The Median very close to the center and the value of median
is approximately less than 5; 75 percent of the customers spend less than $7.)

6) Given the contingency table shown here, find P(G | M).

Somerset Oakland Great Lakes

        Row Total
Vehicle Type (S) (O) (G)
Car (C)     44       49       36       129  
Minivan (M)     21       15       18       54  
Full-Size Van (F)     2       3       3       8  
SUV (V)     19       27       26       72  

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Truck (T)     14       6       17       37  
Col Total     100       100       100       300  

A) .1800 B) .0450
C) .3333 D) .1350

7) The manager of Ardmore Pharmacy knows that 25 percent of the customers entering the store buy
prescription drugs, 65 percent buy over-the-counter drugs, and 18 percent buy both types of drugs. What
is the probability that a randomly selected customer will buy at least one of these two types of drugs?

P(A) = 0.25 ; P(B) = 0.65 ; P (A∩ B) = 0.18

P(A∪ B) = P(A) + P(B) - P (A∩ B) = 0.25+0.65-0.18 = 0.72

A) .90 B) .85
C) .72 D) .65

8) In a certain city, 5 percent of all drivers have expired licenses and 10 percent have an unpaid parking
ticket. If these events are independent, what is the probability that a driver has both an expired license and
an unpaid parking ticket?

A) .010 B) .005
C) .001 D) Cannot be determined

9) At Joe's Restaurant, 80 percent of the diners are new customers (N), while 20 percent are
returning customers (R). Fifty percent of the new customers pay by credit card, compared with
70 percent of the regular customers. If a customer pays by credit card, what is the probability
that the customer is a new customer?

P(A) = 0.8 ; P(E|A) = 0.5 P(B) = 0.2 ; P(E|B) = 0.7

 New customers use credit card: 0.8*0.5 = 0.4
Return customers use credit card: 0.2*0.7 = 0.14
Customers pay credit card: 0.14*0.4 = 0.54
0.4
 New customers represent = =0.7407
0.54

A) .7407 B) .8000
C) .5400 D) .5000

10) To ensure quality, customer calls for airline fare quotations are monitored at random. On a particular
Thursday afternoon, ticket agent Bob gives 40 fare quotations, of which 4 are incorrect. In a random
sample of 8 of these customer calls, which model best describes the number of incorrect quotations Bob
will make?

A) Binomial B) Poisson
C) Hypergeometric D) Geometric

11) A carnival has a game of chance: a fair coin is tossed. If it lands heads you win $1.00, and if it lands
tails you lose $0.50. How much should a ticket to play this game cost if the carnival wants to break even?

P(win) = 0.5 P(lose) = 0.5

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The expected gain in game = E(X) = 0.5*1 – 0.5*0.5 = 0.25

A) $0.25 B) $0.50
C) $0.75 D) $1.00

12) A clinic employs nine physicians. Five of the physicians are female. Four patients arrive at once.
Assuming the doctors are assigned randomly to patients, what is the probability that all of the assigned
physicians are female?

A) .0397 B) .0295
C) .0808 D) .0533

13) On average, 15 minutes elapse between discoveries of fraudulent corporate tax returns in a certain
IRS office. What is the probability that less than 30 minutes will elapse before the next fraudulent
corporate tax return is discovered?

(*P(X<30) = 1 - e− x/ β =1−e−30 /15)

A) .1353 B) .6044
C) .7389 D) .8647

14) A software developer makes 175 phone calls to its current customers. There is an 8 percent chance of
reaching a given customer (instead of a busy signal, no answer, or answering machine). The normal
approximation of the probability of reaching at least 20 customers is

A) .022 B) .007
C) .063 D) .937

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15) A random sample of 160 commercial customers of PayMor Lumber revealed that 32 had paid their
accounts within a month of billing. The 95 percent confidence interval for the true proportion of
customers who pay within a month would be

A) 0.148 to 0.252 B) 0.138 to 0.262

C) 0.144 to 0.256 D) 0.153 to 0.247

16) The owner of Limp Pines Resort wanted to know the average age of its clients. A random sample of
25 tourists is taken. It shows a mean age of 46 years with a standard deviation of 5 years. The width of a
98 percent confidence interval for the true mean client age is approximately

A) ±1.711 years. B) ±2.326 years.

C) ±2.492 years. D) ±2.797 years.

17) Jolly Blue Giant Health Insurance (JBGHI) is concerned about rising lab test costs and would like to
know what proportion of the positive lab tests for prostate cancer are actually proven correct through
subsequent biopsy. JBGHI demands a sample large enough to ensure an error of ±2 percent with 90
percent confidence. What is the necessary sample size?

A) 4,148 B) 2,401
C) 1,692 D) 1,604

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18) A sample of 16 ATM transactions shows a mean transaction time of 67 seconds with a standard
deviation of 12 seconds. Find the test statistic to decide whether the mean transaction time exceeds 60
seconds.

A) 1.457 B) 2.037
C) 2.333 D) 1.848

19) The Melodic Kortholt Company will change its current health plan if at least half the employees are
dissatisfied with it. A trial sample of 25 employees shows that 16 are dissatisfied. For a right-tailed test,
the test statistic would be

A) 1.227 B) 1.375
C) 1.400 D) 1.115

20) Carver Memorial Hospital's surgeons have a new procedure that they think will decrease the time to
perform an appendectomy. A sample of 8 appendectomies using the old method had a mean of 38
minutes with a variance of 36 minutes, while a sample of 10 appendectomies using the experimental
method had a mean of 29 minutes with a variance of 16 minutes. For a right-tailed test of means (assume
equal variances), the test statistic is

A) 3.814 B) 2.365
C) 3.000 D) 1.895

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21) Randomly chosen MBA students were asked their opinions about the ideal number of children for a
married couple. The sample data were entered into MegaStat, and the following results were produced.

Hypothesis Test: independent Groups

(t-test, unequal variance)
Men           Women    
2.812          2.1538  mean
1.2505          0.5547  std. dev.
11          13  sample size
           13  pooled df
0.6582  difference (Men - Women)       
0.40722  standard error of difference       
0  hypothesized difference       
1.62  T       
0.065  p-value (one-tailed, upper)       
               
F-test for equality of variance       
    1.56375  variance: Men       
    0.307692  variance: Women       
    5.08  F       
    0.01  p-value       

What conclusion can you draw from this analysis at α = .05?

A) Men want larger families on average than women.
B) Women want larger families on average than men.
C) This is insufficient evidence to suggest a difference in means.
D) We could conclude that men want larger families if we used a two-tailed test.

22) A medical researcher wondered if there is a significant difference between the mean birth weight of
boy and girl babies. A random sample of babies' weights (pounds) showed the following:

Boys 8.0 4.7 7.3 6.2 3.4

Girls 5.3 2.8 6.4 6.8 7.4

How many degrees of freedom would be used to test for a zero difference in means?
A) 4 B) 8
C) 10 D) Must know α to say.

23) A random sample of Ersatz University students revealed that 16 females had a mean of $22.30 in their
wallets with a standard deviation of $3.20, while 6 males had a mean of $17.30 with a standard deviation
of $9.60. At α = .10, to test for equal variances in a two-tailed test, the critical values are

A) 0.441 and 3.24 B) 0.556 and 2.27

C) 0.345 and 4.62 D) 0.387 and 2.90

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Questions 24 to 26 are based on the following partial ANOVA results from Excel (some
information is missing).

ANOVA table
Source SS df MS F P-value
Treatment   717.4     3             .0442  
Error               70.675          
Total   1,848.2     19                

24) The MS (mean square) for the treatments is (SS/df)

A) 239.13 B) 106.88
C) 1,130.8 D) impossible to ascertain from the information given.

25) The F statistic is (MS treatment/MS error)

A) 4.87 B) 3.38
C) 5.93 D) 6.91

26) Our decision about the hypothesis of equal treatment means is that the null hypothesis
(p-value < alpha => reject, different)

A) cannot be rejected at α = .05.

B) can be rejected at α = .05.
C) can be rejected for any typical value of α.
D) cannot be assessed from the given information.

27) A local trucking company fitted a regression to relate the travel time (days) of its shipments as a
function of the distance traveled (miles). The fitted regression is Time = −7.126 + 0.0214 Distance. If
Distance increases by 50 miles, the expected Time would increase by

(*0.0214*50 = 1.07 days)

A) 1.07 days. B) 7.13 days.

C) 2.14 days. D) 1.73 days.

28) A fitted regression Profit = 262 + 1.51 Sales (all variables in thousands of dollars) was estimated
from a random sample of 15 small coffee kiosks. We can say that

A) the slope is too small to be significant.

B) the intercept does not seem reasonable.
C) the R2 will be low due to small sample size.
D) predictions are likely to be underestimated.

29) A researcher's regression results are shown below using n = 8 observations.

Variable Coefficients Standard Error

Intercept   –0.1667     2.8912  
Slope   1.8333     0.2307  

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Which is the 95 percent confidence interval for the slope?

A) [1.333, 2.284] B) [1.602, 2.064]

C) [1.268, 2.398] D) [1.118, 2.449]

30) A fitted regression Profit = −570 + 30 Sales (all variables in thousands of dollars) was estimated from
a random sample of pharmacies. From this regression, in order to break even (Profit ≥ 0), a pharmacy's
Sales would have to be at least

A) 19 B) 300
C) 56 D) 100

PART 2: SHORT ANSWER. Write the word or phrase that best answers the question.
1) The following table is the frequency distribution of parking fees for a day: 

Fee (dollars) Number of Garages

6.00 < 6.50   5  
6.50 < 7.00   8  
7.00 < 7.50   10  
7.50 < 8.00   7  

What is the mean parking fee?

6.25× 5+6.75 ×8+7.25 × 01+ 7.75× 7

=7.07
5+8+10+7

2) Here are statistics on order sizes of Megalith Construction Supply's shipments of two kinds of
construction materials last year. 

  Girders Rivets
Mean 160   2800  
Std. Dev. 48   702  

Which order sizes have greater variability?

3) Given the contingency table shown here, find P(B | A). 

Age
Absences Under 25 (A) 25 or More (A') Row Total
Under 2 days (B)   50     40     90  
2 or more days (B')   30     80     110  
Column Total   80     120     200  

P(B | A) = 50/80 = 0.625

4) Ramjac Company wants to set up k independent file servers, each capable of running the company's
intranet. Each server has average "uptime" of 98 percent. What must k be to achieve 99.999 percent
probability that the intranet will be "up"?

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5) From the following tree, find the probability that a randomly chosen person will get the flu vaccine and
will also get the flu.
 

= 0.7*0.10 = 0.07

6) There is a .02 probability that a customer's Visa charge will be rejected at a certain Target store
because the transaction exceeds the customer's credit limit. What is the probability that the first such
rejection occurs within the first 20 Visa transactions?

7) What is the standard deviation of the random variable Y = 3X − 10 if the expected value of a random
variable X is 140 and the standard deviation of it is 14.

E(X) = 140
SD(X) = 14
Now Y= 3X-10
SD(Y) = 3SD(X) – SD(10)
= 3.14 – 0 = 42
(*standard deviation of a constant is alws zero).

8) On average, a major earthquake (Richter scale 6.0 or above) occurs 3 times a decade in a certain
California county. What is the probability that less than six months will pass before the next earthquake?

9) A poll showed that 48 out of 120 randomly chosen graduates of California medical schools last year
intended to specialize in family practice. What is the width of a 90 percent confidence interval for the
proportion that plan to specialize in family practice?

C1:

C2:

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 x 48
p= = =0.4
n 120
q = 1- q = 0.6
z value for 90% confidence level = 1.645
p∗q 0.4∗0.6
 Margin of error = ± z
√ n √
= ± 1.645 .
120
=±0 .073566

10) A company wants to estimate the time its trucks take to drive from city A to city B. The standard
deviation is known to be 12 minutes. What sample size is required so that the error does not exceed ±2
minutes, with 95 percent confidence?

11) The process that produces Sonora Bars (a type of candy) is intended to produce bars with a mean
weight of 56 gm. The process standard deviation is known to be 0.77 gm. A random sample of 49 candy
bars yields a mean weight of 55.82 gm. Which are the hypotheses to test whether the mean is smaller than
it is supposed to be?

Produce bars with mean wight of 56gm.

The null and alternative hypothesis test mean is smaller than to be test population is less than
56gm.

 Null hypothesis: H O =μ ≥ 56 gm
Alternative hypothesis: H 1=μ<56 gm

12) The process that produces Sonora Bars (a type of candy) is intended to produce bars with a mean
weight of 56 gm. The process standard deviation is known to be 0.77 gm. A random sample of 49 candy
bars yields a mean weight of 55.82 gm. Find the test statistic to see whether the candy bars are smaller
than they are supposed to be.

13) The process that produces Sonora Bars (a type of candy) is intended to produce bars with a mean
weight of 56 gm. The process standard deviation is known to be 0.77 gm. A random sample of 49 candy
bars yields a mean weight of 55.82 gm. Find the p-value for a test to see whether the candy bars are
smaller than they are supposed to be.

C1:
To test our null hypothesis: H O : μ=56 gm
against the alternative: H 1 : μ< 56 gm
n ( x́ −μ 0 )
Our test statistic is: t = √
s
This is a left tailed test.
Given n = 49, x́=55.82 , s=0.77
The test statistic is:
t=
√ 49 ( 55.82−56 ) =−1.6363
0.77
from t-table, with df = 49 - 1 = 48 and t = -1.636
1.299 < 1.636 < 1.677
0.05 < p_value < 0.10
 between 0.05 and 0.10

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C2:

14) During a test period, an experimental group of 10 vehicles using an 85 percent ethanol-gasoline
mixture showed mean CO2 emissions of 667 pounds per 1000 miles, with a standard deviation of 20
pounds. A control group of 14 vehicles using regular gasoline showed mean CO 2 emissions of 679
pounds per 1000 miles with a standard deviation of 15 pounds. At α = .05, what is the test statistics in a
left-tailed test (assuming equal variances)?

Question 15 to 17 are based on the following partial ANOVA results from Excel (some
information is missing). The response variable was Y = maximum amount of water pumped
from wells (gallons per minute).

Source of Variation SS df MS F
Depth of well   2450     2     1225     b   
Age of well   364.667                 3.8371  
Interaction   32.667     4           0.1719  
Error   855.333     18     47.519        
Total   3702.667     26              

15) What are the degrees of freedom for age of well?

16) What is the F statistic for depth of well?

= 1225 / 46.519 = 25.78

17) What is the MS for interaction?

Question 18 to 20 are based on the following REGRESSION results from Excel. A researcher used
Femlab (labor force participation rate among females) to try to predict Cancer (death rate per
100,000 population due to cancer) in the 50 U.S. states.

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 Regression Statistics
Multiple R 0.313422848  
R Square 0.098233882  
Adjusted R Square 0.079447088  
Standard Error 32.07003698  
Observations 50  

Variable Coefficients Standard Error t Stat

Intercept   343.619889     61.0823514     5.62552  
Femlab   –2.2833659     0.99855319     –2.28667  

18) What is the meaning of R Square in the above results?

19) Based on this estimated relationship, when labor force paticipation rate among females increases by
5%, the expected death rate per 100,000 population due to cancer would increase or decrease by how
much?

20) Which is the 95 percent confidence interval for the slope?

--- END OF EXAMINATION PAPER ---

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