FACULTY OF SCIENCE AND AGRICULTURE

SPRING SESSION EXAMINATION 2000

QBM 117 BUSINESS STATISTICS

SUBJECT CONVENOR: Kerrie Cullis (Wagga Wagga)
DAY & DATE: TIME:
WRITING TIME: Three (3) hours READING TIME: Ten (10)
minutes
MATERIALS SUPPLIED BY UNIVERSITY: 1 x 12 page examination answer
booklet
1 x General Purpose Answer
Sheet
MATERIALS PERMITTED IN EXAMINATION: Battery operated calculator (no
printer)
2B Pencil, eraser, ruler
Text: Australian Business
Statistics by Selvanathan and
Selvanathan
May be annotated and cross
referenced.
INSTRUCTIONS TO CANDIDATES:
1. Enter your name and student number and sign in the space provided at the
bottom of this page.
2. This examination is open to the Selvanathan textbook only.
3. This examination consists of two parts.
Part A: 4 Objective Questions Part B: 20 Multiple Choice Questions
4. Part A is to be answered in the examination answer booklets provided.
Number each question clearly. Write your name and student number on the
front cover of the answer booklets used.
5. Part B is to be answered on the General Purpose Answer Sheet, using a 2B
pencil ONLY. Fill in your name and student number. Make sure you fill the
circle completely and make no stray marks on the answer sheet.
This examination is worth 60% of the final assessment.

INSTRUCTIONS TO INVIGILATORS:

1. The examination paper must not be retained by the candidate.

STUDENT NAME: STUDENT NO:

QBM117 Exam - Spring 2000 Page 1 of 13

 PART A

These questions are to be answered in the answer booklet provided.

Question 1

The following data represent the number of cases of salad dressing purchased per
week by a local supermarket chain over a period of 30 weeks.

Week Number of cases Week Number of cases Week Number of cases

1 81 11 86 20 91
2 61 12 133 22 99
3 77 13 91 23 89
4 71 14 111 24 96
5 69 15 86 25 108
6 81 16 84 26 86
7 66 17 131 27 84
8 111 18 71 28 76
9 56 19 118 29 83
10 81 20 88 30 76

a. Construct an ordered stem and leaf display to sort the data.

(3 marks)

b. After examining the stem and leaf display prepared in a., comment on the
possible distribution of the number of cases purchased by the supermarket
chain.
(2 marks)

c. When the table of descriptive statistics was printed below, the ink in the
printer was running low and many of the important descriptive statistics were
missing. Find all these missing values.

Number of cases

Mean
Standard Error
Median
Mode
Standard Deviation
Sample Variance
Kurtosis 0.4838
Skewness 0.8075
Range 77
Minimum 56
Maximum 133
Sum 2641
Count 30
Confidence Level(95.0%) 7.0157

(10 marks)

QBM117 Exam - Spring 2000 Page 2 of 13

d. Compare the mean and the median. Based on this comparison, what is the
most likely distribution of the number of cases purchased? Explain.
(3 marks)

e. If you had to make a prediction of the number of cases of salad dressing that
would be ordered next week, how many cases would you predict? Why?
(2 marks)

QBM117 Exam - Spring 2000 Page 3 of 13

Question 2

a. The probability that a consumer entering a retail outlet for microcomputers

and software packages will buy a particular type of computer is 0.15. The
probability that the consumer will buy a particular software package is 0.10.
There is a 0.05 probability that the consumer will buy both the computer and
the software package.

i. What is the probability that the consumer will buy the computer or the
software package or both?
(2 marks)

ii. If a consumer buys the particular type of computer, what is the

probability he will also buy the software package?
(2 marks)

b. An advertisement claims that two out of five doctors recommend a certain

pharmaceutical product. A random sample of 20 doctors is selected, and it is
found that only two of them recommend the product.

i. Assuming the advertising claim is true, what is the probability of the

observed event?
(3 marks)

ii. Assuming the claim is true, what is the probability of observing two or
fewer doctors recommending the product?
(2 marks)

iii. Given the sampling results, do you believe the advertisement? Explain.
(2 marks)

c. Final grades in a university subject were normally distributed with an average

of 68% and standard deviation of 12%.

i. If the pass mark was 50%, what proportion of the class failed?
(3 marks)

ii. The lecturer in charge is instructed to award a credit grade to all

students who scored 75% or more. What is the probability a randomly
selected student will score a credit?
(3 marks)

iii. The lecturer in charge is also instructed to award High Distinctions to

at most, 10% of the class. What is the minimum cut-off grade for a
HD?
(3 marks)

QBM117 Exam - Spring 2000 Page 4 of 13

Question 3

a. The taxation department wants to estimate to within $500, the average income
of all workers, with 95% confidence. How large a sample should the
department take if the standard deviation for incomes is known to be $3000?
(5 marks)

b. A sample of 25 male students from QBM 117 had their heights recorded. It
was found that the average and standard deviation of their heights was 180cm
and 5cm respectively.

i. Calculate a 95% confidence interval for the population average heights

of males who attend QBM 117.
(4 marks)

ii. From historical data it was found that the average height of males in
QBM117 was 175cm. Is there reason to believe that there has been an
increase in males height? Use   5%.
(8 marks)

iii. Find the p-value of the test in ii. above.

(3 marks)

QBM117 Exam - Spring 2000 Page 5 of 13

Question 4

a. A television manufacturer claims that not more than 10% of its television sets
will need any repair during their first 2 years of operation. To test this claim, a
random sample of 100 TV sets are monitored for the first two years of their
operation and 14 are found to need repair. At the 5% level of significance, test
the manufacturers claim. [Use H 0 : p  0.1 H A : p  0.1 ]
(8 marks)

b. A new employee at a large firm was interested in determining whether there

was a relationship between the experience of the employees and the salaries.
He performed a simple linear regression to help him understand this
relationship. The results of this regression are presented in the output which
follows.

Scatterplot showing experience vs salary

50000
40000
Salary ($)

30000
20000
10000
0
0 10 20 30 40 50
Experience (years)

Histogram of residuals

15
Frequency

10
5

0
0
0

00

00

00

00
20
90

20

50

19

36

53

70
-4

-3

-1

Residuals

QBM117 Exam - Spring 2000 Page 6 of 13

 Experience Residual Plot

8000
6000
4000
Residuals
2000
0
-2000
0 10 20 30 40 50
-4000
-6000
-8000
Experience (years)

SUMMARY OUTPUT

Regression Statistics
Multiple R 0.80322468
R Square 0.64516989
Adj. R Square 0.63777759
Std Error 2520.28938
Observations 50

ANOVA
df SS MS F Significance F
Regression 1 554364839 554364839 87.2760049 2.239E-12
Residual 48 304889211 6351858.56
Total 49 859254050

Coefficients Std Error t Stat P-value Lower 95% Upper 95%

Intercept 29352.974 553.821078 53.0008248 2.9527E-44 28239.4427 30466.5052
Experience 283.263666 30.3209945 9.34216275 2.239E-12 222.2992558 344.228075

Use the output provided to answer the following questions.

i. Determine the regression equation to predict salary from years of

experience.
(2 marks)

ii. Interpret the slope coefficient.

(2 marks)

iii. From the scatterplot, it appears that salary is linearly related to years of
experience. Test this relationship at a 5% level of significance.
(4 marks)

iv. With reference to the plots provided, does it appear that the linear
model fitted in Excel is appropriate?
(4 marks)

QBM117 Exam - Spring 2000 Page 7 of 13

 PART B

These questions are to be answered on the General Purpose Answer Sheet provided.
Use a 2B pencil only.

1. You are looking at the sales figures for 35 companies. The variable is

A. quantitative and ordinal.

B. qualitative and ordinal.
C. quantitative and nominal.
D. qualitative and nominal.
E. quantitative and ratio.

2. We have a set of data with 200 data values. The minimum value is 2.5 and the
maximum value is 80. Which set of class intervals should be used to prepare
the frequency distribution.

A.
> 0 up to and including 5
> 5 up to and including 10
> 10 up to and including 15
> 15 up to and including 20
> 20 up to and including 25
> 25 up to and including 30
> 30 up to and including 35
> 35 up to and including 40
> 40 up to and including 45
> 45 up to and including 50
> 50 up to and including 55
> 55 up to and including 60
> 60 up to and including 65
> 65 up to and including 70
> 70 up to and including 75
> 75 up to and including 80
B.
0 to 10
10 to 20
20 to 30
30 to 40
40 to 50
50 to 60
60 to 70
70 to 80
C.
> 2.5 up to and including 12.5
> 12.5 up to and including 22.5
> 22.5 up to and including 32.5
> 32.5 up to and including 42.5
> 42.5 up to and including 52.5
> 52.5 up to and including 62.5
> 62.5 up to and including 72.5
> 72.5 up to and including 82.5

QBM117 Exam - Spring 2000 Page 8 of 13

 D.
> 0 up to and including 10
> 10 up to and including 20
> 20 up to and including 30
> 30 up to and including 40
> 40 up to and including 50
> 50 up to and including 60
> 60 up to and including 70
>70 up to and including 80
E.
> 0 up to and including 20
> 20 up to and including 40
> 40 up to and including 60
> 60 up to and including 80

3. All 18 people in a department have just received across-the-board pay rises of

4%. What has happened to the standard deviation of these salaries?

A. The standard deviation has stayed the same.

B. The standard deviation has increased by 4%.
C. The standard deviation has increased by 2%
D. The standard deviation has decreased by 4%
E. We are unable to determine this, without the actual salaries.

4. Which type of graphical display would allow us to determine a specific

percentile most easily?

A. A cumulative relative frequency polygon (ogive).

B. A cumulative relative frequency histogram.
C. A boxplot.
D. A relative frequency polygon.
E. A relative frequency histogram.

5. The histogram following shows the length of hospital stay (in days) for a
sample of patients.

Histogram showing length of hospital stay

20
Freqeuncy

15
10
5
0
1 5 9 13 17 21 25 29 33
Length of stay (days)

QBM117 Exam - Spring 2000 Page 9 of 13

 The distribution shape is best described as

A. positively skewed.
B. negatively skewed.
C. approximately normally distributed.
D. unimodal.
E. bimodal.

6. If a box of camera film has 10 rolls in it and 3 have already been used. What
is the probability of selecting 2 rolls and finding both are unused?

A. 0.067
B. 0.21
C. 0.467
D. 0.49
E. 0.933

7. Given that Z is a standard normal random variable, find P ( Z  2.3)

A. 0.9893
B. 0.9890
C. 0.4893
D. 0.0107
E. 0.4890

Use the following information to answer questions 8. and 9.

The owner of the local service station notices that on average, 10 cars arrives every
ten minutes. If we assume that cars arrive randomly and independently,

8. find the probability that exactly 3 cars arrive in the next ten minutes.

A. 0.172
B. 0.117
C. 0.010
D. 0.003
E. 0.007

9. find the probability that fewer than 5 cars arrive in the next five minutes.

A. 0.067
B. 0.038
C. 0.616
D. 0.176
E. 0.440

QBM117 Exam - Spring 2000 Page 10 of 13

10. An automatic transmission factory, which produces, on average, 400
transmissions daily, has had some problems with quality. The manager decides
to gather information from tomorrow’s production for careful evaluation.
Which of the following sampling methods would provide the best estimate of
the proportion of defective transmissions being produced?

A. The first five transmissions produced.

B. The 18 transmissions that are sitting outside the plant because they
never worked.
C. Every 200th transmission produced.
D. A random sampling taken at the end of the day from the day’s
production.
E. All obviously defective transmissions together with a random sampling
of the apparently non-defective ones.

11. Which of the following statements about normal distributions is false?

A. Normal distributions are bell shaped.

B. Normal distributions always have a mean of zero and standard
deviation of 1.
C. In a normal distribution, the mode  median  mean .
D. A normal distribution is symmetrical.
E. About 68 % of observations lie within 1 standard deviation of the
mean.

12. If the level of significance is changed from 5% to 10%, the probability of

rejecting a null hypothesis which is actually true becomes

A. lower.
B. higher.
C. remains the same.
D. depends on whether it is a one or two tailed test.
E. none of the above.

13. In a packet of 50 seeds, two did not germinate. Estimate a 95% confidence
interval for the population proportion of seeds that will not germinate.

0.04  0.96
A. 0.04  1.96
50
0.04  0.96
B. 0.04  1.645
50
0.96  0.04
C. 0.96  1.96
50
0.96  0.04
D. 0.96  1.645
50
E. ˆ and nq
none of the above since both np ˆ are not greater than 5.

QBM117 Exam - Spring 2000 Page 11 of 13

Use the following information to answer questions 14 and 15.
If the null and alternative hypotheses are

H 0 :   100
H A :   100

14. The appropriate test would be a(n)

A. lower tailed test.

B. two tailed test.
C. upper tailed test.
D. upper tailed test containing only half the level of significance.
E. lower tailed test containing only half the level of significance.

15. If x was found to be equal to 102.3, given that  2  25 and n = 36, the
appropriate test statistic would be

102.3  100
A. t
5 / 36
102.3  100
B. z
5 / 36
102.3  100
C. t
5
102.3  100
D. z
5
102.3  100
E. z
25 / 36

16. The p-value for a certain hypothesis test was 0.15. The level of significance
used for this test was 0.05. With this information we should

A. reject H 0 .
B. do not reject H 0 .
C. accept H A .
D. do not reject H A .
E. none of the above.

17. The residuals formed when a regression line is fitted to a data set should
ideally

A. be normally distributed.
B. have an expected value of zero.
C. have a variance which is independent of the value of the independent
variable.
D. be independent from each other.
E. possess all the characteristics of A., B., C. and D.
Use the following information to answer questions 18., 19. and 20.

QBM117 Exam - Spring 2000 Page 12 of 13

The output following shows the regression statistics for the simple linear regression
between the earnings per share and the closing stock price of selected biotechnical
firms with large market capitalisation.

SUMMARY OUTPUT
Pric
Regression Statistics
Multiple R 0.422719 1

(per share)
Earnings
R Square 0.178691 0
Adj R Square 0.133063
-1 0
Std Error 0.443519
-2
Observations 20

ANOVA
df SS MS F Sig F
Regression 1 0.770359 0.770359 3.916237 0.06332857
Residual 18 3.540761 0.196709
Total 19 4.31112

Coeffs StdError t Stat P-value Lower 95% Upper 95% Lower 99.0% Upper 99.0%
Intercept -0.644023 0.173623 -3.709317 0.001605 -1.0087913 -0.279254 -1.14378624 -0.14425904
Price ($) 0.02382 0.012037 1.978948 0.063329 -0.0014682 0.04910918 -0.01082715 0.05846812

18. The correlation between the earnings per share and the closing stock price is

A. 0.179
B. –0.179
C. 0.423
D. –0.423
E. unable to be determined from the information provided.

19. The 99% confidence interval estimate of the y-intercept (  0 ) is

A. -$1.14 to -$0.14
B. -$0.01 to $0.06
C. -$1.01 to -$0.28
D. -$0.00 to $0.05
E. unable to be determined from the information given

20. If we wanted to test for a significant correlation (α = 0.01) between the

earnings per share and the closing stock price, the critical t value would be

A. t 0.01,19
B. t 0.005,18
C. t 0.01,17
D. t 0.01,18
E. t 0.005,19

QBM117 Exam - Spring 2000 Page 13 of 13