Applied Statistics for Management Exam Review
Course Introduction
Applied Statistics for Management introduces students to the fundamental statistical concepts and methodologies used in business decision-making processes. The course emphasizes practical applications of descriptive and inferential statistics, including data collection, visualization, hypothesis testing, regression analysis, and forecasting, with a strong focus on interpreting results in a managerial context. Students will develop analytical skills to solve real-world business problems by leveraging statistical software and case studies, enabling them to make informed decisions in areas such as marketing, finance, operations, and human resources.
Recommended Textbook
Statistical Techniques in Business and Economics 16th Edition by Douglas Lind
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Page 2
Chapter 1: What Is Statistics
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Sample Questions
Q1) An ordinal level of measurement implies some sort of ranking.
A)True
B)False
Answer: True
Q2) A portion or part of a population is called a:
A) Random survey
B) Sample
C) Tally
D) Frequency distribution
Answer: B
Q3) The "lowest" level of measurement is ___________.
Answer: nominal
Q4) The members of each basketball team wear numbers on their jerseys. What scale of measurement are these numbers considered?
A) Nominal
B) Ordinal
C) Interval
D) Ratio
Answer: A
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Chapter 2: Describing Data: Frequency Tables, Frequency
Distributions, and Graphic Presentation
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Sample Questions
Q1) A student was studying the political party preferences of a university's student population. The survey instrument asked students to identify their political preference, for example, Democrat, Republican, Libertarian, or another party. The best way to illustrate the frequencies for each political preference is a __________.
A) Bar chart
B) Box plot
C) Histogram
D) Frequency polygon
Answer: A
Q2) A group of 100 students were surveyed about their interest in a new Economics major. Interest was measured in terms of high, medium, or low. In the study, 30 students responded high interest, 50 students responded medium interest, and 20 students responded low interest. What is the best way to illustrate the relative frequency of student interest?
A) Use a cumulative frequency polygon
B) Use a box plot
C) Use a pie chart
D) Use a frequency table
Answer: C
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Chapter 3: Describing Data: Numerical Measures
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Sample Questions
Q1) The relationship between the mean and median in a negatively skewed distribution would be that the _____________.
Answer: mean is less than the median
Q2) What is a disadvantage of the range as a measure of dispersion?
A) It is based on only two observations.
B) It can be distorted by a large mean.
C) It is not in the same units as the original data.
D) It has no disadvantage.
Answer: A
Q3) Over the last six months, the following numbers of absences have been reported: 6, 0, 10, 14, 8, and 0. What is the median number of monthly absences?
A) 6
B) 7
C) 8
D) 3
Answer: B
Q4) When computing the mean for grouped data, the numerator is the sum of
Answer: the product of class frequencies and midpoints
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Chapter 4: Describing Data: Displaying and Exploring Data
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Sample Questions
Q1) A __________ clearly shows outliers.
Q2) A stem-and-leaf display includes the following row: 3 | 0 1 3 5 7 9. Assume that the data is rounded to the nearest whole number. Which of the following statements is true?
A) The frequency of the class is seven.
B) The minimum value in the class is 0.
C) The maximum value in the class is 39.
D) The class interval is 5.
Q3) A scatter diagram of sales versus production is labeled with sales on the Y-axis and production on the X-axis.
A)True
B)False
Q4) A scatter diagram of sales versus production may be constructed by plotting the minimum, first quartile, median, third quartile, and maximum values of each variable.
A)True
B)False
Q5) The coefficient of skewness measures a distribution's ____________ symmetry.
Q6) The ______________ is used to measure the relative symmetry of a distribution.
Q7) What is the common purpose of a dot plot and a box plot?
Page 6
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Chapter 5: A Survey of Probability Concepts
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Sample Questions
Q1) A coin is tossed four times. The joint probability that all four tosses will result in a head is ¼ or 0.25.
A)True
B)False
Q2) There are 10 AAA batteries in a box and 3 are defective. Two batteries are selected without replacement. What is the probability of selecting a defective battery followed by another defective battery?
A) ½ or 0.50
B) ¼ or 0.25
C) 1/120 or about 0.0083
D) 1/15 or about 0.07
Q3) When applying the special rule of addition for mutually exclusive events, the joint probability is _______.
A) 1
B) .5
C) 0
D) Unknown
Q4) Complete the following analogy: An experiment relates to outcome, as the role of a die relates to _____.
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Chapter 6: Discrete Probability Distributions
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Sample Questions
Q1) For a binomial distribution, the mean is 4.0 and n = 8. What is for this distribution?
A) 0.5
B) 1.00
C) 4.0
D) 0.1
Q2) Affirmative action commitments by many organizations have led to an increase in the number of women in executive positions. Satellite Office Systems has vacancies for two executives that it will fill from among four women and six men. What is the probability that exactly one woman is selected?
Q3) In which of the following discrete distribution does the probability of a success vary from one trial to the next?
A) Binomial
B) Poisson
C) Hypergeometric
D) All of these.
Q4) In a Poisson distribution, each trial is ___________________.
Q5) A probability distribution shows the outcomes of an experiment and the ___________________ of each one occurring.
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Chapter 7: Continuous Probability Distributions
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Sample Questions
Q1) A new extended-life light bulb has an average life of 750 hours, with a standard deviation of 50 hours. If the life of these light bulbs approximates a normal distribution, about what percent of the distribution will be between 600 hours and 900 hours?
A) 95%
B) 68%
C) 34%
D) 99.47%
Q2) The number of different standard normal distributions is unlimited.
A)True
B)False
Q3) The time to fly between New York City and Chicago is uniformly distributed with a minimum of 120 minutes and a maximum of 150 minutes. What is the probability that a flight is less than 135 minutes?
A) 1.00
B) 0.50
C) 0.25
D) 0.00
Q4) The proportion of the area under a normal curve that is to the left of z = 1.40 is
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Chapter 8: Sampling Methods and the Central Limit
Theorem
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Sample Questions
Q1) A sampling distribution of the means is a probability distribution consisting of all possible sample means of a given sample size selected from a population.
A)True
B)False
Q2) If a population is normally distributed, then the sampling distribution of the sample means will be __________________________.
Q3) If the size of a sample equals the size of the population, the sampling error is ________.
Q4) When all the items in a population have an equal chance of being selected for a sample, the process is called _________________.
A) simple random sampling
B) z-score
C) sampling error
D) nonprobability sampling
Q5) For a sampling distribution of the means, about ________% of the means would be between ±1.96 standard deviations.
Q6) Sampling is required when crash testing cars because the products are __________.
Page 10
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Chapter 9: Estimation and Confidence Intervals
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Sample Questions
Q1) A survey of 16 executives showed a mean work time per week of 50 hours, with a standard deviation of 10 hours. What is the 95% confidence interval for the population mean?
Q2) A research firm needs to estimate within 3% the proportion of junior executives leaving large manufacturing companies within three years. A 0.95 degree of confidence is to be used. Several years ago, a study revealed that 21% of junior executives left their company within three years. To update this study, how many junior executives should be surveyed?
A) 594
B) 612
C) 709
D) 897
Q3) One factor in determining the size of a sample is the degree of confidence selected. This is usually 0.95 or 0.99, but it may be any degree of confidence you specify.
A)True
B)False
Q4) Thirty-six items are randomly selected from a population of 150 items. The sample mean is 25 and the sample standard deviation is 3. What is the finite population correction factor?
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Chapter 10: One-Sample Tests of Hypothesis
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Sample Questions
Q1) A statement about the value of a population parameter is called a ________________.
Q2) A tire manufacturing company is reviewing its warranty for their rainmaker tire. The warranty is for 40,000 miles. The distribution of tire wear is normally distributed with a population standard deviation of 15,000 miles. The tire company believes that the tire actually lasts more than 40,000 miles. A sample of 49 tires revealed that the mean number of miles is 45,000 miles. To test the hypothesis at a 0.05 significance level, what is the decision rule?
Q3) Consider a right-tailed test (upper tail) and a sample size of 40 at the 95% confidence level. The value of t is ________.
A) +2.023
B) -2.023
C) -1.685
D) +1.685
Q4) A p-value is the same as a stated significance level.
A)True
B)False
Q5) When planning an experiment, how is a significance level related to sample size?
Q6) How is a significance level determined and how is it related to Type I error?
Page 12
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Chapter 11: Two-Sample Tests of Hypothesis
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Sample Questions
Q1) For hypotheses that compare two population means, what test statistic is used when the population standard deviations are known?
Q2) For a hypothesis comparing two population means, H<sub>0</sub>: <sub>1</sub> <sub>2,</sub> what is the critical value for a one-tailed hypothesis test, using a 5% significance level, with both sample sizes equal to 13? Assume the population standard deviations are equal.
A) ±1.711
B) +1.711
C) +2.060
D) +2.064
Q3) The paired t test is especially appropriate when the two samples are ________.
Q4) If two dependent samples of size 100 are used to test the difference between the means, the degrees of freedom for a t-statistic are _____.
Q5) When testing for a difference between the means of two dependent samples, the sample test statistic is a ______________.
Q6) When dependent samples are used to test for differences in the means, we compute ________________ differences.
Q7) The paired difference test has ___________ degrees of freedom.
Page 13
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Chapter 12: Analysis of Variance
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Sample Questions
Q1) Which statement is correct about the F distribution?
A) Cannot be negative
B) Cannot be positive
C) Is the same as the t distribution
D) Is the same as the z distribution
Q2) Analysis of variance is used to _____________.
A) Compare nominal data
B) Compute a t test
C) Compare population proportions
D) Simultaneously compare several population means
Q3) The number of mean square errors summarized in a two-way ANOVA table is _______. They are called _______.
Q4) An ANOVA procedure is applied to data obtained from four distinct populations. The samples, each comprised of 15 observations, were taken from the four populations. The degrees of freedom for the numerator and denominator for the critical value of F are:
A) 4 and 60, respectively.
B) 4 and 21, respectively.
C) 3 and 59, respectively.
D) 3 and 56, respectively.
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Chapter 13: Correlation and Linear Regression
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Sample Questions
Q1) What is the test statistic to test the significance of the slope in a regression equation?
A) z-statistic
B) F-statistic
C) t-statistic
D) -statistic
Q2) The best model to describe a linear relationship between two variables is the
Q3) If the coefficient of determination is 0.81, the coefficient of correlation is _____.
Q4) Because the coefficient of determination is expressed as a percent, its value is between 0% and 100%.
A)True
B)False
Q5) What is the general form of the regression equation?
A) = ab
B) = a + (bX)
C) = (a + b)X
D) = abX
Q6) The minimum and maximum values of the coefficient of determination are ________.
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Chapter 14: Multiple Regression Analysis
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Sample Questions
Q1) In multiple regression analysis, a correlation matrix is used to check for
Q2) When applying stepwise regression, the basis for including an independent variable in a multiple regression model is __________.
Q3) In multiple regression analysis, when the independent variables are highly correlated, this situation is called __________________.
A) Autocorrelation
B) Multicollinearity
C) Homoscedasticity
D) Curvilinearity
Q4) If there are four independent variables in a multiple regression equation, there are also four ______.
A) Y-intercepts
B) Regression coefficients
C) Dependent variables
D) Constant terms
Q5) When evaluating the assumptions of a multiple regression model, a _______ is calculated for every observation in a data set.
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Chapter 15: Nonparametric Methods: Nominal Level
Hypothesis Tests
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Sample Questions
Q1) Based on the Nielsen ratings, the local CBS affiliate claims its 11 p.m. newscast reaches 41% of the viewing audience in the area. In a survey of 100 viewers, 36% indicated that they watch the late evening news on this local CBS station. What is the null hypothesis?
A) H<sub>0</sub>: = 0.36
B) H<sub>0</sub>: = 0.41
C) H<sub>0</sub>: 0.36
D) H<sub>0</sub>: µ = 0.41
Q2) The pooled estimate of the proportion is found by dividing the total number of successes by ___________________________.
Q3) If we are testing for the difference between two population proportions, it is assumed that the two samples are large enough that the binomial distribution can be approximated by ______.
Q4) A manufacturer claims that less than 1% of all its products do not meet the minimum government standards. A survey of 500 products revealed that 10 did not meet the standard. If the z-statistic is -2.58 and the level of significance is 0.02, your decision would be __________.
Q5) Contingency table analysis can be used to test for a relationship between two _________ scale variables.
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Chapter 16: Nonparametric Methods: Analysis of Ordinal Data
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Sample Questions
Q1) What is a null hypothesis for a one-tailed sign test?
A) H<sub>0</sub>: = 0
B) H<sub>0</sub>: 1.00
C) H<sub>0</sub>: = 0.50
D) H<sub>0</sub>: 0.50
Q2) The Wilcoxon signed-rank test of differences requires that the data be at least ordinal scaled and that the two samples be related.
A)True
B)False
Q3) A study was conducted on the percent of total advertising dollars spent by ten local firms for advertising in the press and on cable television. Results were ranked with a resulting sum of squared differences equal to 128. What is the computed value of t?
A) 0.719
B) 0.804
C) 1.339
D) 0.650
Q4) For small samples, the test statistic for the sign test is the z statistic.
A)True
B)False
Page 18
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Chapter 17: Index Numbers
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Sample Questions
Q1) Sean McCarthy earns $20,000 a year, while John Nowak earns $35,000. What is John's income as an index using Sean's income as the base?
A) 175.0
B) 75.0
C) 100.0
D) 57.1
Q2) The _________ method for computing a weighted price index uses current year weights.
Q3) The Consumer Price Index (1982-84 = 100) reports a CPI in August 2010 for Rent of Shelter as 239.115. What is the percentage change in the price of Rent of Shelter compared to the base?
Q4) The Dow Jones Industrial Index is a ____________________.
Q5) In 2000, an executive earned $100,000. In 2009, the executive earned $125,000. The CPI in 2000 was 172.2, and the CPI in 2009 was 214.537. Using the CPI base, 1982-1984 = 100, what was the real income in 2000?
Q6) Two methods of computing a weighted price index are the Laspeyres method and Paasche's method.
A)True
B)False
Page 19
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Chapter 18: Time Series and Forecasting
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Sample Questions
Q1) For quarterly seasonal indexes, the total of the adjusted quarterly indexes will equal
A) 4.0
B) 1.0
C) 100%
D) a variable
Q2) For the third quarter, the sales are 2,500 units; the seasonal index for the quarter is 0.95. What are the deseasonalized sales for the quarter?
A) 1,600
B) 2,632
C) 2,080
D) 2,500
Q3) The forecast for the third quarter is 2,000 units; the seasonal index for the quarter is 0.79. What are the seasonally adjusted sales for the quarter?
A) 1,921
B) 1,580
C) 790
D) 1,015
Q4) A graph of a deseasonalized time series does NOT show ________.
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Chapter 19: Statistical Process Control and Quality Management
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Sample Questions
Q1) Consider a company that wishes to verify that an incoming product meets the stipulated requirements by screening the products using a statistical sampling plan. If the sample inspection reveals that a lot was accepted, yet it had more defects than it should, this is referred to as:
A) a Type I error.
B) producer's risk.
C) consumer's risk.
D) a sampling error.
Q2) In acceptance sampling, usually 100% of the incoming lot is checked.
A)True
B)False
Q3) A _________ chart portrays the number of defects per unit of production.
Q4) Random samples of four items are selected from a manufacturing process at regular intervals and a certain quality characteristic is measured. After 25 samples, X = 15,350 and R = 411.4. To construct a range chart, what is the lower control limit (LCL) for the range?
A) 602.004
B) 411.400
C) 625.666
D) 0.00
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Chapter 20: An Introduction to Decision Theory
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Sample Questions
Q1) Optimists advocate a maximax strategy.
A)True
B)False
Q2) A maximin strategy will always choose the act or alternative that:
A) maximizes the expected monetary value.
B) minimizes the maximum regret or opportunity loss.
C) maximizes the potential payoff regardless of the state of nature.
D) guarantees a payoff for any state of nature.
Q3) The manager of Paul's fruit and vegetable store is considering the purchase of a new seedless watermelon from a wholesale distributor. Since this seedless watermelon costs $4, will sell for $7, and is highly perishable, he only expects to sell between six and nine of them. What is the payoff value for the purchase of nine watermelons when the demand is for eight watermelons?
A) 6
B) 13
C) 20
D) 27
Q4) The maximin strategy is a __________ strategy for decision making.
Q5) The ___________ decision-making strategy maximizes the minimum gain.
Page 22
Q6) Another term for a payoff or consequence is _________________.
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