1. We are interested in the mean scores on an exam.

A random sample of 36 scores is taken and

gives a sample mean 76. Suppose we know that population standard deviation is 3 points.
What is the 90% confidence interval estimate for the population mean exam score?

a. [75.2, 76.8]

b. [75.0, 77.0]

c. [77.4, 78.6]

d. None of the other choices.

Lower limit=76-1.645*3/sqrt(36)=75.2; Upper limit=76+1.645*3/sqrt(36)=76.8

2. A financial officer for a company wants to estimate the percent of accounts receivable that are
more than 30 days overdue. He surveys 500 accounts and finds that 300 are more than 30 days
overdue. What is the 90% confidence interval for the true percent of accounts receivable that
are more than 30 days overdue?

a. [56.4%, 63.6%]

b. [57.2%, 62.8%]

c. [55.7%, 64.3%]

d. None of the other choices.

Lower limit=0.6-1.645*sqrt(0.6*0.4/500)=0.564; Upper limit=0.6+1.645*sqrt(0.6*0.4/500)=0.636;

3. A cost accountant is developing a regression model to predict the total cost of producing a
batch of printed circuit boards as a linear function of batch size (the number of boards
produced in one lot or batch), production plant (Kitchener and Hamilton), and production shift
(day and evening). In this model, "shift" is ___.

a) a response variable

b) an independent variable

c) a quantitative variable

d) a dependent variable
4. Suppose the earnings per share (EPS) for a population of industrial stocks are Normally
distributed. A random sample of 16 stocks is taken. The sample mean is 1.90 and the sample
standard deviation is 0.40. What is the 95% confidence interval for the average EPS of this
population of industrial stocks?

a. [1.50, 2.30]

b. [1.72, 2.08]

c. [1.68, 2.12]

d. None of the other choices.

5. A certain experimental drug claims a cure rate of 75% for males with prostate cancer. If the null
hypothesis is p = 75%, what is the Type II error?

a. α

b. β

c. Rejecting the claim when the cure rate actually is 75%.

d. Accepting the claim when the cure rate is actually not 75%.

6. A manufacturer of salad dressings uses machines to dispense liquid ingredients into bottles
that move along a filling line. The machine that dispenses salad dressings is working properly
when 8.0 ounces are dispensed. So Ho is µ=8.0. Suppose that the average amount dispensed in
a particular sample of 24 bottles is 7.95 ounces with a sample variance of 0.03 ounces squared.
What should be the test statistic to use?

a. Z test statistic

b. t test statistic with 23 as the degrees of freedom

c. t test statistic with 24 as the degrees of freedom

d. None of the other choices

7. The mortgage department of a large bank is interested in the nature of loans of first-time
borrowers. This information will be used to tailor their marketing strategy. They believe that
more than 50% of first-time borrowers take out smaller loans than other borrowers. To support
their belief, they sample 100 first-time borrowers and find 53 of these loans are smaller than
the other borrowers. For the hypothesis test, they choose a 5% level of significance. What
should be the Ho?

a. p ≤ 0.50

b. p ≤ 50

c. µ ≥ 50

d. p > 0.50

Using the following information, answer questions 8 and 9:

An interesting research question is the effect, if any, that different types of teaching formats have
on the grade outcomes of students. Under a current study, we consider two teaching formats: a
hybrid format (Population 1) and a standard lecture format (Population 2). We want to prove that
the hybrid format leads to a higher average student grade. For hypothesis testing, a sample of 35
students from the hybrid format is taken with mean of 76. A sample of 40 students from the
standard lecture format is taken with mean of 70. Assume σ1 is 16 and σ2 is 9 and α = 0.01.

8. What is the test statistic based on the samples?

a. Not enough information to tell because the population distributions are unknown.

b. t = 1.31

c. z = 1.96

e. z = 1.31

9. What is the p-value?

a. Not enough information to tell because the population distributions are unknown.

b. p-value = 0.025

c. p-value = 0.095

e. p-value = 0.190
 Use the following information to answer questions 10 and 11: A researcher is conducting a
matched-pairs study to see if the quality level will change after some quality management
program. She gathers data on each pair in the study, which are shown in the table below. The
sample statistic will be the before-treatment quality minus the after-treatment quality. Assume
that the data are normally distributed in the populations.

Pair Before-treatment After-treatment Difference

quality quality
1 9 12
-3
2 8 10
-2
3 11 12
-1
4 8 10
-2
5 9 12
-3

10. The sample mean is ___.

a) 9.0

b) 11.2

c) 2.20

d) -2.20

11. Assume that the data are normally distributed in the population. The sample standard
deviation of the difference is 0.837. A 95% confidence interval of the population difference
would be ___.

a) –3.02 to –0.18

b) –1.6 to –1.09

c) –3.24 to -1.16

d) –2.11 to –1.09

Confidence interval: Lower limit=-2.20 – critica_t*0.837/sqrt(5)=-2.20 – 2.776 *0.837/sqrt(5)=-

3.24. Upper limit=-1.16.

critica_t=2.776 because upper tail probability is 0.025 and DF=4.

12. Maureen Jackson, CEO of a mail order business for fashion shoes, is reviewing the order filling
operations at her warehouses. Her goal is 100% of orders shipped within 24 hours. In previous
years, the East Coast Warehouse performed about equally well with the West Coast
Warehouse. This year, her staff randomly selected 200 orders from the West Coast Warehouse
(population 1) and 400 orders from the East Coast Warehouse (population 2), and reports that
190 of the West Coast Orders were shipped within 24 hours, and the East Coast Warehouse
shipped 350 orders within 24 hours. Maureen would like to show the West Coast outperforms
the East Coast. Assuming α = 0.05, the observed z value is ___.

a) –3.15

b) 2.42

c) 1.53

d) 2.89

West: p1bar=190/200=0.95; East: p2bar=350/400=0.875; pbar=(190+350)/600=0.9

Z=(0.95-0.875)/sqrt(0.9*0.1*(1/200+1/400))=2.89

13. Supermart Inc. operates 151 stores. Cathy Ng, Marketing Manager, feels that the level of
lighting may affect store sales. She chooses three levels of lighting (soft, medium, and bright)
and randomly assigns 10 stores to each lighting level. In Cathy’s experimental design "store
sales" is ___.

a) the dependent variable

b) a concomitant variable

c) a treatment variable

d) a blocking variable
 Supermart Inc. operates 151 stores. Cathy Ng, Marketing Manager, feels that the level of
lighting may affect store sales. She chooses three levels of lighting (soft, medium, and bright)
and randomly assigns ten stores to each lighting level. Analysis of Cathy’s data yielded the
following ANOVA table. Use this ANOVA table to answer questions 14 and 15.

Source of SS df MS F
Variation
Treatmen 48411.11 2 Cell_II: 48411.11/2 Cell_IV: 24205.555/1278.86
t =24205.555 =18.93
Error 34529.17 Cell_I: Cell_III: 34529.17/27
30- =1278.86
3=27
Total 84940.28
14. What is the value of Cell_III?

a. 4841.11

b. 2420.56

c. 3429.17

d. 1278.86

C=3, n_T=30.
Cell_III=34529.17/(30-3)= 1278.86

15. What is the value of Cell_IV?

a. 18.93: 24205.555/1278.86=18.93

b. 11.43

c. 1.39

d. None of the other choices.

16. In multiple regression analysis involving 10 independent variables and 100 observations, the critical
value of t for testing individual coefficients in the model will have

a. 99 degrees of freedom
b. 90 degrees of freedom
c. 89 degrees of freedom: DF=n-k-1=100-10-1=89
d. 98 degrees of freedom

17. A test of independence is to be performed. The contingency table has 4 rows and 5 columns.
Using α = 0.05, the critical chi-square value is ___.

a) 20

b) 9

c) 26.30

d) 21.03: DF=(4-1)*(5-1)=12; Critical value (α = 0.05, DF=12)=21.03

18. The numerical value of the coefficient of correlation must be ___.

a) between –1 and +1

b) between –1 and 0

c) between 0 and 1

d) between 0 and –1

19. A simple regression model developed for 12 pairs of data resulted in a sum of squares of error,
SSE = 400. The standard error of the estimate is ___.

a) 4.47

b) 6.32: Se=sqrt(400/(12-2))=6.32

c) 5.30

d) 4.74
 Use the following information to answer questions 20-22:
Louis Tang, a cost accountant at Prime Plastics, Inc. (PPI), is analyzing the manufacturing costs
of a moulded plastic telephone handset produced by PPI. Louis's independent variable is
production lot size (in 1,000's of units), and his dependent variable is the total cost of the lot (in
$100's). Regression analysis of the data yielded the following tables. Note that the numbers in
some cells are to be determined.

Coefficients Standard Error t statistic

Intercept 3.996 1.161268 3.441065
X 0.358 0.102397 3.496205

Source Df SS MS F
Regression 1 9.858769 9.858769
Residual 11 0.806545
Total 12 18.73077

20. Using α = 0.01, Louis should ____.

a) increase the sample size

b) not reject H0: β1 = 0

c) reject H0: β1 = 0

d) do not reject H0: β0 = 0

In the final exam, we only have the F-table for α = 0.05. So we can’t use the F test. We can only use
the t-test.
Observed t-statistic=0.358/0.102397=3.496
Critical t (0.01/2, DF=n-k-1=n-2=11)=3.106
So we reject H0: β1 = 0.

21. To test the validity of the overall linear model using the F test, what is the observed F test
statistic?

a) 8.87

b) 1.11

c) 12.22: observed F=9.858769/0.806545=12.22

d) Not enough information to tell

22. To test the validity of the overall linear model using the F test with α = 0.05, which of the
following statements is FALSE?
 a) The F-test is a two-tailed test.

b) The F-test is an upper-tailed test.

c) The null hypothesis is β1 = 0

d) The null hypothesis states there is no linear relationship between the independent variable
and the dependent variable.

23. A researcher has developed a simple regression model from 13 pairs of data points. He wants
to test to determine if the slope is significantly larger than zero. He uses α = 0.01. The critical
value of the test statistic t is ___.

a) 2.650

b) 3.012

c) 2.681

d) 2.718 critical t (0.01, DF=n-2=11)=2.718

Note that Ha is: β1 > 0. So this is a upper-tailed test.

24. Which of the following statements is true about using simple linear regression to develop a
forecasting trend line?

a) There can be multiple dependent variables.

b) The independent variable must be discrete and its possible values must be integers starting
at 1.

c) The trend line indicates a causation between x and y.

d) Unlike regular simple regression, extrapolating outside the original time frame in the sample
data is required.

25. The Least Square Method in multiple regression analysis is designed to ___.
 a) minimize the total sum of squares (SST)

b) minimize the sum of squares of errors (SSE)

c) maximize the standard error of the estimate

d) maximize the p value for the calculated F value

26. The following ANOVA table is from a multiple regression analysis with n = 35 and four
independent variables:

Source Df SS MS F P

Regressio K=4 600

n
Error n-k- 1000- MSE=400/30
1=35-4- 600=400 =13.33
1=30
Total 1000

The MSE value is ___.

a) 8.57

b) 13.33

c) 10.00

d) 75.00

27. The following ANOVA table is from a multiple regression analysis:

Source Df SS MS F P

Regression 4 2000

Error 19

Total n-1=23 2500

The sample size of the analysis is ___.

a) 30
b) 25
c) 15
d) 24
28. If a qualitative variable has "c" categories, how many dummy variables must be created and
used in the regression analysis?

a) c – 1

b) c

c) c + 1

d) c2

29. A multiple regression analysis produced the following tables:

Predictor Coefficients Standard t statistic p value
Error
Intercept 752.0833 336.3158 2.236241

X1 11.87375 5.32047 2.231711

X2 1.908183 0.662742 2.879226

Source Df SS MS F p value

Regressio 2 203693.3 101846.7 6.745406

n
Residual 12 181184.1 15098.67

Total 14 384877.4

The adjusted R2 is ___.

a) 0.4508

b) 0.5511

c) 0.4809

d) 0.5232

SSE/(n−k −1)
Adjusted R2 ¿ 1− =1-(181184.1/12)/ (384877.4/14)=0.4508
S S yy /(n−1)
30. Alan Ho, a market analyst for Clear Sound Inc., is analyzing sales of heavy metal CD’s. Alan’s
dependent variable is annual heavy metal CD sales (in $100,000's), and his independent
variables are teenage population (in 1,000's) and type of sales district (0 = urban, 1 = rural).
Regression analysis of the data yielded the following tables:

Coefficients Standard t statistic p value

Error
Intercept 1.7 0.384212 4.424638 0.00166

X1 0.04 0.014029 2.851146 0.019054

(teenagers)
X2 (district) -1.5666667 0.20518 -7.63558 3.21E-05

For two sales districts with the same number of teenagers one urban and one rural, Alan's model
predicts ___.

a) $1,7000,000 lower average sales in the rural district

b) the same average sales in both districts

c) $156,666 lower average sales in the rural district

d) $156,666 higher average sales in the rural district

31. Use the following set of observed frequencies to test the independence of the two variables.
Variable one has the two categories of 'A' and 'B'; variable two has the categories of 'C', 'D', and 'E'.

C D E
A 12 10 8 30
B 20 24 26 70
32 34 34 100

What is the expected frequency of the intersection between Category “B” and Category “E”?

a) 34.0
b) 70.0
c) 23.8: 34*70/100=23.8
d) None of the other choices.