QM 2

PASS I 38 of 43 Correct I 88% / 65% (% Correct / % Required to Pass) view results
43. The regression analysis below relates US annual energy consumption in trillions of BTUs to the independent
variables "US Gross Domestic Product (GDP) in trillions of dollars" and "average gas mileage of all passenger
cars in miles per gallon (mpg)."
Which of the two independent variables is significant at the 0.01 level?
GDP only
Average car gas mileage only
Both independent variables
Neither independent variable
US Energy Consumption (tn trillion 8TUs)

1
vs. GDP (in $trillions) and Average Car Gas Mileage (in mpgt
RegressionSt.at1strcs
Multtplc R 0.9709
R2 I
0.9426
AdJUStedR 0.9359 F test Rerufts
Standard Error 1,943 F votue Stgnl(. F
Observations 20 139.64 0.0000
Coefllctents ScdError l Stat P V<llUe
lnten:ept 63.6TI 9,7◄9 6.53 0.0000

GDP ($lrllllon~, 3,853 696 5.53 0.0000
Energy Consumption, GDP, and Gas Mileage Avg. car gas mileage (mpg) 697 .Q.10 0.9206
·70.50
Source
42. The data in the Excel spreadsheet linked below gives the average monthly price of gold (in dollars per ounce) for
the years 1980 to 1983.
In which of the years was the coefficient of variation of gold price the highest?
1980
1981
1982
1983
Gold Prices
Source
PASS I 38 of 43 Correct I 88% / 65% (% Correct / % Requiredto Pass) view results
41. The table below displays data on defect rates at a compact disk (CD) pressing facility. The table includes data on
the distribution of CDs that have content errors (missing and/or wrong content), and on the distribution of CDs
that have labeling errors.
What is the conditional probability that a CD has no content errors, given that has a labeling error?
97.02%
1.98%
98.00%
None of the above
No uibelfng Error Labe ing Error

Content
No Content Error 97.02% 1.98%
Conteot Error 0.98% 0.02%
Source
39. In a regression analysis, a residual is defined as
the difference between the actual value and the predicted value of the dependent variable.
the difference between the actual value and the predicted value of the independent variable.
the proportion of the variation in the independent variable that remains unexplained by the variation in
the dependent variable.
the proportion of the variation in the dependent variable that remains unexplained by the variation in the
independent variable.
Source
38. In a finance course at a business school, 6 students are randomly selected. Their mean score on the final exam
is 75, with standard deviation 8.
What is the 95% confidence interval for the average class score on the final?
[66.6, 83.4]
[67.6, 82.4]
[68.6, 81.4]
[71.7, 78.3]
Source
37. The data in the Excel spreadsheet linked below gives the net worth (in US$ billions) and ages of the world's
billionaires as reported by Forbes Magazine in 2001.
What is the correlation coefficient between age and net worth?
About 0.00
Greater than 0.5
Less than -0.5
Not enough information to determine the answer
Forbes Magazine Billionaires

Source
36. The histogram below displays the distribution of income among households in the United States in 2001.
Suppose a researcher takes a random sample of 60 households and calculates average household income in
the sample. Suppose 99 other researchers conduct identical studies, each independently collecting a random
sample of 60 households and computing the average household income in that sample.
Which of the following best describes the distribution of the 100 different average household incomes calculated
by the researchers?
Symmetric with one peak

Symmetric with two peaks
Skewed left
Skewed right
US Income D\strtbutton
16,000
1 ◄ ,000 All llouseflolds with income greater than S100f<
Ill
"O
12,000 have been consolidated m one category.
0
.c 10,000
~
Ill
~ 8,000
0
:x:: 6,000
-
0 4,000
2,000
0
Source
34. The table below displays a week's worth of data on daily sales at the Crank It Louder Music Store.
Over that time period, what was the median daily level of sales?
$1,643.23
$3,489.79
$3,130.46
$800.12
'(in $)
Monday 80.43
Tuesday 835.88
Wednesday 1,643.23
Thursday 800.12
Friday 4,617.69
Saturday 9,002.17
Crank It Louder Sales Sunday 7,449.02
Source
33. In a public opinion poll, 48% of 189 respondents favor an elimination of tIDCeson dividend income.
How many respondents would be needed to calculate a 95% confidence interval (for the proportion of people
who favor an elimination of tIDCeson dividend income) that has a total width no greater than 4% (i.e., the estimate
must be within+/- 2% of the true population proportion)?
2,398
600
1,689
Source
32. The WH meat-packing company must decide whether or not to recall one week's production of kielbasa due to
possible contamination. An outbreak of non-fatal food poisoning may be linked to WH. If so, WH may face a
lawsuit. The tree below summarizes the decision.
What is the expected monetary value of the cost of not issuing a recall?
$80,000
$120,000
$800,000
$0
Ex1 t d Coi;ts
WH m heated
10
No Lawsuit $0
Oo. l Rt.-c.a
ti 80':\,
WH Not 1-r, ltr 1tf'"d S.0

-----------
90 .
....
Rec.a
.................
ll______________ $120,000
Source
30. The average height of American women is distributed normally, with a mean of 63.5 inches and a standard
deviation of 2.5 inches.
Approximately what percentage of American women are taller than 58.5 inches, but shorter than 68.5 inches?
50%
68%
84%
95%
Source
variables "US Gross Domestic Product (GDP) in trillions of dollars" and "average gas mileage of all passenger
cars in miles per gallon (mpg)."
The coefficient for the independent variable "average car gas mileage (mpg)," -70.50, describes
the relationship between energy consumption and average car gas mileage, controlling for GDP.
the relationship between energy consumption and average car gas mileage, not controlling for GDP.
the relationship between average car gas mileage and GDP, controlling for energy consumption.
the relationship between average car gas mileage and GDP, not controlling for energy consumption.
US Enc-r1,yCans.umptJon (In trllllon BTIJs.)

V5. GOf:'~1n$tr1lltonstand Ave~ C:arGasMilec11eClnmpsO
0.910Y
0"42h
0.9J5~ F lrJt frl!'RA'll
S~c:Emir 1,941 fvr.m.M SJr,tlJ f
OIMCrv.uJCftS 20 139~ 0.0000

~l/lctmu Std Em,, .•Sto< P·ll4Wt
lnrPfr t 63,nn 9,71.9 6.~ 0.0000

GOPI!><nllJom
I 3,453 ~D 5 53 C)0000
Energy Consumption, GDP, and Gas Mileage
Source
,
..... 1 ~n tr .--.,at! 4rnpt, ·7C~ om ·C 10 0 920c,
variable "US Gross Domestic Product (GDP) in trillions of dollars."
How much of the variation in energy consumption can be explained by variation in the gross domestic product?
About 94%
About 97%
About 99.99%
Almost none of the variation in energy consumption can be explained by variation in GDP.
US Energy Consumption (in trillion BTUs)

vs. Gross Domestic Product (1n Str1rnons)
Rejresslon Statrstks
Multiple R 0.9709
Rz 0.9426
2
Adjusted R 0.939-4 F test results
Standard ErrOf' 1,839 F votue S#gnif. F

{icf ents
COE!f Std Error t Stat P-value
Intercept 62.695 1,325 47.)1 0.0000

Energy Consumption and GDP GOP(Stnlltons) 3,786 220 17.19 0.0000
Source
27. In a survey of 48 citizens, 36 registered strong disapproval with their government's economic leadership. In the
previous month, the proportion of participants registering strong disapproval was 65%.
At the 95% confidence level and using a two-sided test, which of the following statements do these data support?
There is not sufficient evidence to indicate that the proportion of participants registering strong
disapproval has changed.
The proportion of participants registering strong disapproval has increased.
The proportion of participants registering strong disapproval has stayed the same.
None of the above.
Source
25. A manufacturer of microwaves gathers information on microwave sales from a random sample of 50 stores in a
large retail chain. In the sample, the mean number of microwaves sold per store last week was 19, with standard
deviation 2.
What is the 95% confidence interval for the mean number of microwaves sold at a retail store in the chain last
week?
[18.45, 19.55]
[17.00, 21.00]
[15.00, 23.00]
[18.27, 19.73]
Source
In a given year, if GDP is $7.4 trillion, what is the expected energy consumption?
Around 90,711 trillion BTUs


vs. GrossDomesticProduct(1n Str1rnons)
Multiple R 0.9709
Rz 0.9426
2

COE!f
{icf ents Std Error t Stat P-value
Intercept 62.695 1,325 47.)1 0.0000

Source
23. The data in the Excel spreadsheet linked below gives the average monthly price of gold (in dollars per ounce) for
the years 1980 to1983.
Which of the following statistics measures gold price variation in the same units as gold price itself (i.e., dollars
per ounce)?
The standard deviation

The variance
The coefficient of variation
None of the above
Gold Prices
Source
22. A company's average accounts receivable per customer is $132.54. After a problem in the automated accounting
software is suspected, a random sample of 38 accounts reveals a sample mean of $143.55 and a sample
standard deviation of $38.29.
After running a two-sided hypothesis test of the hypothesis that the average accounts receivable has changed,
what is the best conclusion (using a 95% confidence level)?
There is not sufficient evidence that the average accounts receivable has changed.
The average accounts receivable is still $132.54.
The average accounts receivable has changed.
The average accounts receivable is at least $143.55.
Source
21. bizneznuz.com, an online business news agency, conducts a poll. Visitors to the site are invited to click on one of
two buttons in order to register that they "agree" or "disagree" with the following statement: "Funding for space
exploration should be left entirely to the private sector."
If bizneznuz.com wants to accurately measure its online readership's support for government-funded space
exploration, this poll will deliver a biased and unrepresentative response because:
The pool of respondents is self-selected.

All respondents have internet access.
bizneznuz.com targets mainly the business community.
All of the above.
Source
20. Amalgamated Fruits, Vegetables, and Legumes, an agricultural company, breeds the experimental fruit "kiwana."
The company is studying the effects of a new fertilizer on the number of kiwanas per bunch grown on kiwana
trees. The regression analysis below relates the number of kiwanas per bunch to the independent dummy
variable "fertilizer."
Based on the regression, which of the following statements may be concluded?
On average, the use of the new fertilizer increases the number of kiwanas per bunch by 5.25.
The independent dummy variable "fertilizer" is significant at the 0.01 level.
Variation in the independent dummy variable "fertilizer" explains around 53% of the variation in the
number of kiwanas per bunch.
None of the above.
umber of K1wanas per Bunch

vs. Use of Fertilizer
R~rrnXlfl 5.tt:Jt1st1a
Nat1,:te R o.s.i..1
R1 0.2860
1
Ad1usl~ R 0.2350 F l~Jt t t5tJI(
5t.ind31'dCrra- 1.l7 F•mllll! 5J'l11if.F

Observ~llOf'IS lb 5..61 O..Ql2.8
Ca.-
0 Jllrlmt( \Ill rJT'Of t \.tilt P•mh,
Intercept S.?5 0.49 10.82 0.0«.0

Kiwana Growth and Fertilizer
f~1lRittt 1.63 0.69 2.)7 O.OJl.8
Source
t1' 19. The table below displays data on defect rates at a compact disk (CD) pressing facility. The table includes data on
Which of the following statements is true?
The fact that a CD has a content error tells us nothing about whether it has a labeling error.
The events of a CD having a content error and a CD having a labeling error are statistically dependent.
The fact that a CD has a labeling error tells us something about whether it has a content error.
None of the above.

Content
Source
t1' 18. Market researcher Ally Nathan is studying the relationships among price, type (classical or steel string), and
consumer demand for acoustic guitars. She wants to find the relationship between demand and price, controlling
for type.
To determine this relationship, what should she do?
Run a simple regression of the dependent variable demand on the independent variable price and
observe the coefficient on price.
Run a simple regression of the dependent variable demand on the independent variable type and
observe the coefficient on type.
Run a multiple regression of the dependent variable demand on the independent variables price and
type and observe the coefficient on price.
Run a multiple regression of the dependent variable demand on the independent variables price and
type and observe the coefficient on type.
Source
t1' 17. Which of the following correctly ranks from smallest to largest the measures of central tendency of the data
displayed in the histogram below?
Mode < mean < median

Median < mode < mean
Mode < median < mean
Histogram
OAO
O 35
0.30
g 0.25
=._ 0 20
8.
f
a.
0.15
0.10
0 o5
0.00
2 3 5 6 7 8 9 10
Values
Source
t1' 15. In a public opinion poll, 48% of 189 respondents favored an elimination of ta,ces on dividend income.
What is the 95% confidence interval for the proportion of people who favor an elimination of ta,ces on dividend
income?
[40.9%, 55.1 %]
[47.5%, 48.5%]
[42.0%, 54.0%]
Source
,., 14. The WH meat-packing company must decide whether or not to recall one week's production of kielbasa due to
The EMV of the cost of not issuing a recall is $80,000. Based on EMV, WH should not issue a recall. If WH
chooses to recall, which of the following best describes the WH's attitude towards this decision?
Risk averse
Risk neutral
Risk seeking
Chicken
ExpectedCosts
Lav.suit S,4,000.00Cl
2m;
WH mohc.aled
Et.W. $80,000 0
tfo lawIDrt S,{J

Do t H,1
80'
__
WH Not Im
....._ ______
__._licaled _ SO
90
=R~""'"II
______________ S120
Source
,., 13. The table below displays a week's worth of data on daily sales at the Crank It Louder Music Store.
Over that time period, what was the mean daily level of sales?
$3,489.79
$4,071.42
$1,643.23
$2,829.92
'(in $)
Monday 80.43
Tuesday 835.88
Wednesday 1,643.23
Thursday 800.12
Friday 4,617.69
Saturday 9,002.17
Crank It Louder Sales Sunday 7,449.02
Source
t1' 12. The table below displays data on defect rates at a compact disk (CD) pressing facility. The table includes data on
What is the probability that a randomly selected CD has a content error?
1.00%
0.98%
0.02%
None of the above

Content
Source
9' 11. The data table below tabulates a pizza parlor's advertising expenditures and sales for 8 consecutive quarters.
The marketing manager wants to know how much of an impact current advertising will have on sales two
quarters from now.
When running a regression with the dependent variable "sales" and the independent variable "advertising lagged
by two quarters," how many data points can she use, given the available data?
6
7
8
9
Qtr 1, 2001 523,000 88,000

Qtr 2, 2001 512,000 84,000
Qtr 3, 2001 528,000 '92,000
Qtr 4 2001 533,000 92,000
Qtr 1, 2002 540,000 96,000
Qtr 2- 2002 540,000 95,000
Qtr 3 2002 538,000 93,000
Pizza Parlor Sales and Advertising
Source
Qtr 4, 2002 541,000 98,000
t1' 10. The regression analysis below relates US annual energy consumption in trillions of BTUs to the independent
Which of the following statements is true?
The y-intercept of the regression line is 62,695 trillion BTUs.

The x-intercept of the regression line is $62,695 trillion.
In the event that a thermonuclear war completely halts all economic activity and the US GDP drops to
zero, energy consumption will sink to 62,695 trillion BTUs.
None of the above.

vs. GrossDomesticProduct(1n Str1rnons)
Multiple R 0.9709
Rz 0.9426
2

COE!f
{icf ents Std Error t Stat P-value
Intercept 62.695 1,325 47.)1 0.0000

Source
., 9. A researcher wants to collect data about the study habits of sophomores at Harmond University. From the
sophomore class of 2,300 students, she wants to collect a sample of 70 students.
Which of the following sampling methods will yield the most representative sample?
Assigning each sophomore a number and then randomly generating 70 numbers from that list
Randomly selecting 70 sophomores entering the university's main library on a randomly selected
evening
Selecting the 70 sophomores whose grade point averages (GPA) fall closest to the mean GPA of the
sophomore class
Randomly selecting 70 sophomores who are members of college fraternities
Source
., 8. The regression analysis below relates US annual energy consumption in trillions of BTUs to the independent
Which of the following is the lowest level at which the independent variable is significant?
0.94
0.10
0.05
0.01

vs. Gross Domestic Product (1n Str1rnons)
Multiple R 0.9709
Rz 0.9426
2

{icf ents
COE!f Std Error t Stat P-value
Intercept 62.695 1,325 47.)1 0.0000

Source
., 7. What completely determines a normal distribution?
Its mean and its standard deviation

Its mean and its mode
Its mean and its median
None of the above
Source
., 6. When calculating a confidence interval for a mean, which of the following will increase the width of the
confidence interval?
Decreasing the sample size

Increasing the sample size
Decreasing the sample mean
Increasing the sample mean
Source
., 5. The regression analysis below relates US annual energy consumption in trillions of BTUs to the independent
The coefficient on the independent variable tells us that
for every additional trillion dollars of GDP, average energy consumption increased by 3,786 trillion
BTUs.
for every additional dollar of GDP, average energy consumption increased by 3,786 trillion BTUs.
for every additional trillion dollars of GDP, average energy consumption increased by 3,786 BTUs.
for every additional trillion BTUs of energy consumption, average GDP increased by $3,786 trillion.
US EneriY Consumption41ntrillion BTUst

vs. GrossDomesticProduct tin Strilhons.)
li'i'Jtl?.llfM sr.atiwcs
lola~leR 0.9709
Rl 0.9◄26
AdJustedR"1 0 ?3'M F t#q nmi.'t,;
\r.imrl:,rd £rmr ,.~ F l·.:irUlf Sljnl(. F
Observaoons 1(J 195 51 0 lnXI

Coe/{IChYlt:5 StdErr<X" t Stal P·1!0(t1e
11teraµt 6.2,695, 1,325 ..7.31 0.0000

Energy Consumption and GDP 3,78& 220 17.11 0.0000
GDJ>tStrilllonsl
Source
4. The histogram below displays the age distribution of the world's billionaires as reported by Forbes Magazine in
2001.
What is the best way to describe this distribution?
Approximately normal
Strongly skewed to the right
Bimodal
Approximately uniform
Age Distribution of B11Uonaires

90 -
80 -
70 - ~
~ 60 -
i:, 50 -
g' 40 -
~
IL )0 -
20 - -
10 -
0
.n.I I I I
0
I
i.n
I
0
I I I .n.n, I
'° '° ;-..

Age·(years)
Source
3. A telemarketing company wants to find out if people are more likely to answer the phone between 8 p.m. and 9
p.m. than between 7 p.m. and 8 p.m. Out of 96 calls between 7 p.m. and 8 p.m., 72 were answered. Out of 105
calls between 8 p.m. and 9 p.m., 90 were answered.
Using a one-sided hypothesis test with a 90% confidence level, which of the following statements do these data
support?
There is not sufficient evidence that the proportion of people who answer the phone between 8 p.m.
and 9 p.m. is greater than the proportion who answer the phone between 7 p.m. and 8 p.m.
People are more likely to answer the phone between 8 p.m. and 9 p.m.
Telemarketers should not call at all during the evenings.
People are more likely to answer the phone between 7 p.m. and 8 p.m.
Source
2. The WH meat-packing company must decide whether or not to recall one week's production of kielbasa due to
The EMV of the cost of not issuing a recall is $80,000. Based on EMV, the manager should not issue the recall.
For what values of p = Prob[WH is implicated] is not recalling the kielbasa preferable to recalling the kielbasa, in
terms of EMV?
p<15%
p>15%
p<85%
None of the above
ExpectedCosts
Lawsuit $4,000 000

200o
WH m ltcated
fJ.\V. S 0,000 0
Oc BO,
__
WH Not Im
....._ ______
__._licaled _ SO
90
..,,_R==II
______________ ~120
Source
., 1. When comparing two regression analyses that have a different number of independent variables, which of the
following should be used to compare the explanatory power of the two regressions?
Adjusted A-squared
A-squared
The correlation coefficient ("Multiple A")
None of the above
Source

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PASS I 38 of 43 Correct I 88% / 65% (% Correct / % Required to Pass) view results

Which of the two independent variables is significant at the 0.01 level?

US Energy Consumption (tn trillion 8TUs)

Observations 20 139.64 0.0000

Coefllctents ScdError l Stat P V<llUe

lnten:ept 63.6TI 9,7◄9 6.53 0.0000

No uibelfng Error Labe ing Error

39. In a regression analysis, a residual is defined as

What is the correlation coefficient between age and net worth?

Forbes Magazine Billionaires

Symmetric with one peak

WH Not 1-r, ltr 1tf'"d S.0

US Enc-r1,yCans.umptJon (In trllllon BTIJs.)

OIMCrv.uJCftS 20 139~ 0.0000

lnrPfr t 63,nn 9,71.9 6.~ 0.0000

US Energy Consumption (in trillion BTUs)

Standard ErrOf' 1,839 F votue S#gnif. F

Intercept 62.695 1,325 47.)1 0.0000

Around 90,711 trillion BTUs

US Energy Consumption (in trillion BTUs)

Standard ErrOf' 1,839 F votue S#gnif. F

Intercept 62.695 1,325 47.)1 0.0000

The standard deviation

The pool of respondents is self-selected.

Based on the regression, which of the following statements may be concluded?

umber of K1wanas per Bunch

5t.ind31'dCrra- 1.l7 F•mllll! 5J'l11if.F

Intercept S.?5 0.49 10.82 0.0«.0

Which of the following statements is true?

No uibelfng Error Labe ing Error

To determine this relationship, what should she do?

Mode < mean < median

tfo lawIDrt S,{J

What is the probability that a randomly selected CD has a content error?

No uibelfng Error Labe ing Error

Qtr 1, 2001 523,000 88,000

Which of the following statements is true?

The y-intercept of the regression line is 62,695 trillion BTUs.

US Energy Consumption (in trillion BTUs)

Standard ErrOf' 1,839 F votue S#gnif. F

Intercept 62.695 1,325 47.)1 0.0000

US Energy Consumption (in trillion BTUs)

Standard ErrOf' 1,839 F votue S#gnif. F

Intercept 62.695 1,325 47.)1 0.0000

., 7. What completely determines a normal distribution?

Its mean and its standard deviation

Decreasing the sample size

The coefficient on the independent variable tells us that

US EneriY Consumption41ntrillion BTUst

Observaoons 1(J 195 51 0 lnXI

11teraµt 6.2,695, 1,325 ..7.31 0.0000

What is the best way to describe this distribution?

Age Distribution of B11Uonaires

'° '° ;-..

Lawsuit $4,000 000

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