Applied Statistics for Business

and Economics I
Bluman, Allan, Elementary Statistics: A Step
by Step Approach, 8th Edition, McGraw-
Hill International Edition, 2012
Chapter I
 Statistics: The
science of conducting
studies to collect, organize, summarize,
analyze & draw conclusions from data.

 Goal 1: Understanding studies.

 Goal 2: Conduct research.

 Goal 3: Make better choices.

 A Variable is a characteristic/attribute
than can take several values
 Data are the values that can be assumed
by the variable.
 A random variable is one whose values
are determined by chance.
 A collection of data values forms a
dataset.
DESCRIPTIVE STATISTICS INFERENTIAL STATISTICS

 Generalize from sample to

population (all subjects
studied).
 Collect Data
 Perform estimations &
 Organize Data hypothesis tests.

 Summarize Data  Determine relationships

between variables.
 Present Data
 Make predictions.

 Probability-theory based.
 Qualitative variables can be placed into
distinct categories, according to some
characteristic or attribute.
 Quantitative variables are numerical and
can be ranked.
A- Discrete Variables assume values that can be
counted.
B- Continuous Variables can assume an infinite
number of values between two numbers.
NB: Rounding of continuous variables!
 Variable

Quantitative Qualitative

Discreet Continuous
 Quantitative

Qualitative
Discrete Continuous

Gender Number of Students Temperature

Race Number of calls received Height

Religious Preference Number of children Weight

Geographical Location Age

 Nominal Level of Measurement: Data
classified into mutually exclusive
categories, without order/ranking.

 OrdinalLM: Data classified into

categories that can be ranked, without
precise difference between ranks.
 Interval
LM: Data is ranked, precise
differences between units exist; but no
meaningful zero.

 RatioLM: Same as Interval LM; but with

true zero. True ratios exist for measures
of a variable between different
population members.
 Data Can be Ranked?

NO: Nominal LM YES: Next Question

Precise Difference Exists between Values?

NO: Ordinal LM YES: Next Question

Meaningful Zero/ Meaningful ratio values?

NO: Interval LM YES: Ratio LM

 Nominal Ordinal Interval Ratio

Gender Rankings (1st, 2nd , 3rd) Temperature Height

Subject taught Letter Grades (A, B,C) IQ Weight

Phone Number SAT score Time

Rating Scale(Poor,
Good, Great)
Marital Status GPA Salary

Religion Age
 Dataare most commonly collected using
surveys:
* Telephone surveys: Low-Cost &
Sincerity; but incomprehensive.
* Mailed Questionnaire Surveys:
Lowest-Costing, Wide Coverage,
Anonymity; but low response-rates/
inappropriate answers.
* Personal Interview Surveys: Most
depth, but risk of bias and high-cost.
 Random Sampling: Select subjects by
using random numbers.

 SystematicSampling: Select subjects by

using every kth number. First subject
randomly selected.
 StratifiedSampling: Select subjects by
dividing the population into groups
(strata). Subjects randomly selected from
each group.

 ClusterSampling: Select subjects by

using an intact group that is
representative of the population.
 Observational Study: Draw conclusions by
only observing what has happened in the
past or is happening in the present.
 Experimental Study: Manipulate one of the
variables and determine how the
manipulation influences other variables.
 Quasi-Experimental Study: Use of intact
groups instead of random assignment.

 NB: Independent/Explanatory vs. Control/

Dependent Variable.
 Control Group/ Treatment Group
 PROS: Controlover the indep. Variable;
Choice in selection of subjects.

 CONS: Lab conditions differ from natural

settings; Hawthorne Effect (change of
behavior by subjects who are being
studied); Confounding variable (i.e. one
that influences the dep. Variable but was
not separated from the indep. Variable).
 PROS: Occurs in natural settings; useful in
cases where experiments could be
unethical (i.e. rapes, murder).

 CONS: Weaker cause-effect

determination; risks concerning
accuracy of data; data could be costly to
collect.
  Pages: 26-27

 EXERCISES: 6; 7; 8; 9; 12 and 17
 6. In each of the statements, tell whether descriptive or
inferential statistics have been used.
 a. By 2040, at least 3.5 Billion people will run short of
water.
 b. Nine out of ten on-the-job fatalities are men.
 c. Expenditures in the cable industry were $5.66 billion
in 1996.
 d. The median Household income for people aged 24-
35 is $35,888.
 e. Allergy therapy makes bees go away.
 f. Drinking decaffeinated coffee can raise cholesterol
levels by 7%.
 g. The national average annual medicine expenditure
per person is $1052.
 h. Experts say that mortgage rates may soon hit bottom.
 Classify each as nominal-level, ordinal-level, interval-
level, or ratio-level measurement:
a. Pages in the 25 best-selling mystery novels.
b. Rankings of golfers in a tournament.
c. Temperatures inside 10 pizza ovens.
d. Weights of selected cell phones.
e. Salaries of the coaches in the4 NFL.
f. Times required to complete a chess game.
g. Ratings of textbooks (poor, fair, good, excellent).
h. Number of amps delivered by battery chargers.
i. Ages of children in a day care center.
j. Categories of magazines in a physicians office
(sports, women's, health, men's, news).
 Classifyeach variable as qualitative or
quantitative:
a. Marital status of nurses in a hospital.
b. Time it takes to run a marathon.
c. Weights of lobsters in a tank in a
restaurant.
d. Colors of automobiles in a shopping
center parking lot.
e. Ounces of ice cream in a large milkshake.
f. Capacity of the NFL football stadiums.
g. Ages of people living in a personal care
home.
 Classify each variable as discrete or continuous:

 a. Number of pizzas sold by Pizza Express each day.

b. Relative humidity levels in operating rooms at
local hospitals.
c. Number of bananas in a bunch at several local
supermarkets.
d. Lifetimes (in hours) of 15 iPod batteries.
e. Weights of the backpacks of first graders on a
school bus.
f. Number of students each day who make
appointments with a math tutor at a local college.
g. Blood pressure of runners in a marathon.
 Classify each sample as random, systematic, stratified,
or cluster:
a. In a large school district, all teachers from two
buildings are interviewed to determine whether they
believe the students have less homework to do now
than in previous years.
b. Every seventh customer entering a shopping mall is
asked to select her or his favorite store.
c. Nursing supervisors are selected using random
numbers to determine annual salaries.
d. Every 100th hamburger manufactured is checked to
determine annual salaries.
e. Mail carriers of a large city are divided into four
groups according to gender and according to whether
they walk or ride on their routes. Then 10 are selected
from each group and interviewed to determine
whether they have been bitten by a dog in the last year.