EDUCATION DEVELOPMENT INTERNATIONAL PLC LCCI IQ SERIES SAMPLE PAPER BUSINESS STATISTICS LEVEL 3 MARKING SCHEME _________________________________________________________________________________ DISTINCTION

MARK 75% CREDIT MARK 60% PASS MARK 50% TOTAL 100 MARKS QUESTION 1 (Total 20 marks) (a) Symmetrical, bell shaped curve with mean, median and mode equal. (b) Mean weight of pack = 4 x 1cao

n x = 100 x 50 = 5000
n sd 2 = 100 52 = 50

1m 1cao 1m 1ft 1cao 1m 1ft

Standard deviation for the pack =

z=

x x 5120 5000 = = 2.4 sd 50

Table probability for z = 2.4 = 0.992

1cao

(c) Weight of pack and container = Joint Standard deviation =

x1+ 2 = x1 + x 2 = 50 + 250 = 300

1m 1cao 1m 1ft 1cao

2 sd12 + sd 2 = 52 + 6 2 = 61 = 7.81

z=

x x 318 300 18 = = = 2.30 sd 7.81 7.81

1m 1ft

Table probability = 0.989 Required probability 1 0.989 = 0.011 1cao

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QUESTION 2 (Total 20 marks) (a) If a large number of samples of a given size are taken the proportions for samples of size 30 or more will be normally distributed with the mean of the proportion equal to population proportion and the standard deviation of the sample proportion (standard error) =

2x2

p(1 p) where n is the sample size. n

1cao 1cao 1 cao
2 2

(b) Null hypothesis: There has been no change in the life of the batteries. Alternative hypothesis: The life of the batteries has been increased. Degrees of freedom = n + m 2 = 12 + 10 2 = 20 Critical t value = 1.72/2.53 x 25 28 36 29 27 26 31 40 25 36 28 22 353 x 29.42 297 y 29.70 y 29 36 28 31 25 26 32 27 38 25 x
2

(x x ) (y y )
19.51 2.01 43.34 0.17 5.84 11.67 2.51 112.01 19.51 43.34 2.01 55.01 0.49 39.69 2.89 1.69 22.09 13.69 5.29 7.29 68.89 22.09

625 784 1296 841 729 676 961 1600 625 1296 784 484 10701 x
2

841 1296 784 961 625 676 1024 729 1444 625

Sum of x&y 1cao Means x&y 1cao Sum of sq either form 1 cao

9005 y
2

316.917

(x x ) (y y )
2

184.1

xx + y y s= n+m2

316.9 + 184.1 = 5.01 12 + 10 2

= 0.28 = 0.13 2.14

1m 1cao

t=

x y 1 1 s + n m

29.42 29.70 1 1 5.01 + 12 10

1m 1cao

Conclusion: the calculated value of t is less than the critical value of t at both the 5% and 1% significance level, there is insufficient evidence to reject the null hypothesis. The additive does not increase the average life of the batteries. (c) A type 2 error is when the null hypothesis is not rejected when it is in fact untrue. A type 2 error might have been made as the null hypothesis was accepted.

2ft

2 x 2ft

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QUESTION 3 (Total 20 marks) (a) Prices: It is unlikely that except for a minority of goods and services that a single price exists. Thus, an average price needs to be constructed based upon a notional average price calculated by the proportion of consumption made at the different prices. Choice of Items: Not all the possible items available for consumption can be included in the index as the processing would be too time complex and time consuming. A representative sample of items has to taken which reflects the general pattern of consumption. This may be based upon a survey of consumer expenditure in the preceding year. Weights: The relative consumption of items needs to be reflected by the index. This can be dealt with through the survey of consumer expenditure which will show the proportion of expenditure in each consumption category. Choice of Index: A wide variety of indices are available and one needs to be chosen. Generally, a current weighted index based on present consumption patterns and prices is compared with a historical pattern of consumption and prices. Similar to that below:

Wn Pn x100 Wn Po

Choice of Base Year: The year in which the index is to begin has to be chosen. It is possible to choose a year which after a period of significant price increases which reduces the apparent increases in prices. The reverse is also true if a year is chosen which is just before a period of significant price increases.

5x2

(b) Some form of random or non-random (quota) stratified sampling would seem the best approach. Explain how a stratified random sample would be taken by allotting all the relevant items of the sampling frame to different strata depending on characteristics e.g. food, fuel etc. Selection of a random sample in each strata. Advantages the sampling error can be calculated, the result can be used in further statistical calculation and it reduces the sampling error. Disadvantages a sampling frame is necessary, the relevant characteristics need to be identified the sample may be drawn from a widely dispersed range of products. Quota sampling involves taking a sample with a given number of people. Quota controls i.e. the characteristics that the items should have are employed. These might relate to the typical family and income. The advantages are that the sample is relatively cheap, there is no need for a sampling frame and no need for call-backs. The disadvantages are there may be bias in the choice of items, theoretically the standard error cannot be calculated so more complex statistical work is not possible.

3 for description 2x1 A/Disa

3 for description 2x1 A/Disa

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QUESTION 4 (Total 20 marks) (a)

o

Cx

KwH 000 y 37 42 46 35 49 58 29 63 76 45 480 y

xy 444 798 644 595 735 580 638 693 608 630 6365 xy 4 x 1cao

12 x 19 14 17 15 10 22 11 8 14 142 x

144 361 196 289 225 100 484 121 64 196 2180 x
2

b=

n xy ( x )( y ) n x ( x )
2 2

1m

b= b= a=

10 6365 142 480 10 2180 1422 4510 = -2.76 1636

1ft

1cao

y bx
n n

a=

480 142 2.76 10 10

1m

a = 48.0 39.15 = 87.15

y = 87.15 - 2.76x

1cao 1cao

(b) (i)

The coefficient of determination measures the percentage of change in one variable associated with the change in the other variable. In this instance it means that 68.89% of the change in electricity consumption is associated with the change in temperature (over the range of temperatures in question). The correlation coefficient =

2x2

(ii)

0.6869 = 0.83

1m 1 cao need - sign 2x1

Null hypothesis: the correlation coefficient does not differ from zero. Alternative hypothesis: the correlation coefficient does differ from zero. The calculated value of the correlation coefficient is greater that the critical value of the correlation coefficient therefore reject the null hypothesis. The correlation coefficient does differ from zero.

2x1

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QUESTION 5 (Total 20 marks) (a) (i) Mutually exclusive events are events where the occurrence of one event prevents the occurrence of a second event. For example, a business project cannot be both successful and unsuccessful. Conditional probability is where the outcome of one event depends upon the outcome of another event. For example, the probability that a person will be on sick leave may depend upon their age.

2 x 1 cao

(ii)

2x1

(b) A 33 2x1

11 1 B 17 1

3 C 20

Venn diagram 3 cao

(i) (ii)

P ( A B C ) = 86% P (one only) 33+17+20 = 70%

1cao 1cao

(c) P( A B ) = 66% P( A C ) = 69% P( B C ) = 53% Therefore A and C should be chosen (d) (i) 0.4 x 0.2 + 0.35 x 0.3 + 0.25 x 0.25 0.08 + 0.105 + 0.0625 = 0.2475 or 24.75% Probability bought on Channel A = 0.08 = 0.32 Probability bought 0.2475

1m 1 cao

1 cao 1m x 1m + 1cao 1m 1ft 1 cao

(ii)

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QUESTION 6 (Total 20 marks) (a) The chi square test tests the degree of association between two variables or randomness goodness of fit to a known distribution. It is based on the differences between observed data and data that could be expected to occur. (b) Null hypothesis: there is no association between the type of television and social class. Alternative hypothesis: there is association between the type of television and social class. Degrees of freedom = (R-1)(C-1) = (4-1)(3-1) = 6 Critical chi-squared = 12.59/16.81 2x2

1 cao 1 cao

1m 2cao

Observed data Totals 60 65 155 120 Totals 400 45 70 120 85 320 25 45 130 80 280 130 180 405 285 1000

Expected frequencies

52 72 162 114

41.6 57.6 129.6 91.2

36.4 50.4 113.4 79.8 chi-squared 1cao 1m 2cao

Contributions to chi-squared 1.231 0.681 0.302 0.316 0.278 2.669 0.711 0.421 3.570 0.579 2.430 0.001 chi-squared = 13.189 2ft need ref to 0.01

Conclusion: the calculated value of chi-squared is greater than the critical value of chi-squared at 0.05 significance level reject the null hypothesis there is evidence to show association between type of television and social class. However, the calculated value of chi-squared is less than the critical value of chi-squared at 0.01 significance level there is insufficient evidence to show an association. (c) Proportion of Plasma Televisions: p = 280/1000 = 0.28 p = 1cao

ci = p 2.58

p(1 p ) 0.28(1 0.28) = 0.28 2.58 n 1000

2.58 = 1cao 1m 1cao

= 0.28 0.037 = 0.253 to 0.317

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QUESTION 7 (Total 20 marks) (a) A one tail test of significance states the alternative hypothesis in terms of the direction of change either greater than or less than. A two tail test states the alternative hypothesis without specifying the direction of change differs from. (b) Null hypothesis: there is no difference in the proportion of items returned due to the type of packaging. Alternative hypothesis: there is a difference in the proportion of items returned due to the type of packaging. Critical z value 1.96/2.58 p1 = 27/1000 = 0.027, Pooled value of p2 = 22/750 = 0.02933 2x2

1cao 1 cao 1m 1ft 1cao

p=

27 + 22 49 = = 0.028 1000 + 750 1750

=

z=

0.027 0.02933 1 1 0.028(1 0.028) + 1000 750

0.00223 = -0.28 0.02722(0.02233)

1m 1ft 1cao

Conclusion the calculated value of z is less than the critical value of z. There is insufficient evidence to reject the null hypothesis. The proportion returned does not differ due to the packaging. (c) A one tail test would test at z = 1.65, and the solution would fall within the acceptance area. The conclusion would be the same. The proportion returned does not differ due to the packaging.

2ft

2x2

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QUESTION 8 (Total 20 marks) (a) A t test is used when the sample size is small less than 30 and the population standard deviation unknown compared with a large sample with known population standard deviation. Null hypothesis: the mean weight of bags does not differ from 1.0 kg. Alternative hypothesis: the mean weight of bags is less than 1.0 kg. Degrees of freedom = n-1 = 11 Critical t value = 2.72

2x2

2x1

2x1

t=

x 0.988 1.000 0.012 = = = -2.77 0.00433 n 0.015 12

1m 1cao

Conclusions: the calculated value of t is greater than the critical value of t. Reject the null hypothesis, there is evidence to suggest the mean weight of bags is less than 1.0 kg.

2 x 1ft

(c) Target weight =

mean + t se = 1.0 + 2.72 .0026 = 1.0 + 0.007 = 1.007 kg

1m 1 + 2.72 1ft 1cao

(d) As the standard error,

se =

or p (1 p )
n

, the larger the sample size the smaller

2x2

will be the standard error. If the sample size increases by a factor of 4 the SE will half.

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