National Economics University

Center for Advanced Educational Programs

MID-TERM EXAM
Statistics for Business and Economics
(LSIC K63, Academic year: 2021-2022)
Time allowed: 120 minutes

Student’s name: ______________________________. Student’s Id: _______________

NEU’s email address: ____________________________.

Instructions:
This is an open-book exam. Students are free to use the lecture notes, textbook, in-class
notes, hand-calculators, and laptops for calculation. You are required to work
independently, and are prohibited form copying, consulting or surfing the internet. There
are 04 questions in this exam. Students are required to answer the questions briefly and
precisely.

Question 1:
A Bloomberg Businessweek North American subscriber study collected data from a
sample of 2861 subscribers. Fifty-nine percent of the respondents indicated an annual
income of $75,000 or more, and 50% reported having an American Express credit card.
a. What is the population of interest in this study?
b. Is annual income a categorical or quantitative variable?
c. Is ownership of an American Express card a categorical or quantitative variable?
d. Does this study involve cross-sectional or time series data?
e. Describe any statistical inferences Bloomberg Businessweek might make on the basis
of the survey.
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Question 2:
U.S. companies lose $63.2 billion per year from workers with insomnia. Workers lose
an average of 7.8 days of productivity per year due to lack of sleep (Wall Street Journal,
January 23, 2013). The following data show the number of hours of sleep attained during
a recent night for a sample of 20 workers.
6 5 10 5 6 9 9 5 9 5
8 7 8 6 9 8 9 6 10 8
a. What is the mean number of hours of sleep for this sample?
b. What is the variance? Standard deviation?
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Question 3:
A large consumer goods company ran a television advertisement for one of its soap
products. On the basis of a survey that was conducted, probabilities were assigned to the
following events.
B = individual purchased the product
S = individual recalls seeing the advertisement
B ∩ S = individual purchased the product and recalls seeing the advertisement
The probabilities assigned were P(B) = .20, P(S) = .40, and P(B ∩ S) = .12.
a. What is the probability of an individual’s purchasing the product given that the
individual recalls seeing the advertisement? Does seeing the advertisement increase the
probability that the individual will purchase the product? As a decision maker,
would you recommend continuing the advertisement (assuming that the cost is
reasonable)?
b. Assume that individuals who do not purchase the company’s soap product buy from its
competitors. What would be your estimate of the company’s market share? Would you
expect that continuing the advertisement will increase the company’s market share?
Why or why not?
c. The company also tested another advertisement and assigned it values of P(S) = .30
and P(B ∩ S) = .10. What is P(B ∣ S) for this other advertisement? Which advertisement
seems to have had the bigger effect on customer purchases?
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Question 4:
Motorola used the normal distribution to determine the probability of defects and the
number of defects expected in a production process. Assume a production process
produces items with a mean weight of 10 ounces. Calculate the probability of a defect
and the expected number of defects for a 1000-unit production run in the following
situations.
a. The process standard deviation is .15, and the process control is set at plus or minus
one standard deviation. Units with weights less than 9.85 or greater than 10.15 ounces
will be classified as defects.
b. Through process design improvements, the process standard deviation can be reduced
to .05. Assume the process control remains the same, with weights less than 9.85 or
greater than 10.15 ounces being classified as defects.

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c. what is the advantage of reducing process variation, thereby causing process control
limits to be at a greater number of standard deviations from the mean?
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