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ISOM 2500 Sample Questions _ Exam 1 K.H.Chen

Problem 1
Each year, ratings are compiled concerning the performance of new cars during the first 90
days of use. Suppose that the cars have been categorized according to weather a car needs
warranty-related repair ( yes or no ) and the country in which the company manufacturing
a car is based (United States or not United States). Based on the data collected, the
probability that the new car needs a warranty repair is 0.04, the probability that the car is
manufactured by a U.S.-based company is 0.60, and the probability that the new car needs a
warranty repair and was manufactured by a U.S.-based company is 0.025.

(a) Suppose you know that a company based in the United States manufactured a
particular car. What is the probability that the car needs warranty repair?
(b) Suppose you know that a company based in the United States did not manufacture a
particular car. What is the probability that the car needs warranty repair?
(c) Are need for warranty repair and location of the company manufacturing the car
independent?

Problem 2
Match the description to the scatterplot.
(a) No pattern. A plot of scrambled pairs would look the same.
(b) Negative direction, linear, small variation around line.
(c) Positive direction, but bending with small variation around curving pattern.
(d) Positive direction, linear, large variation around line.

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Problem 3
What percent of the data fall between Q1 and the median? What percent is between the
median and Q3?

Problem 4
Histograms can be used to show the median, mode, and mean of a distribution. Since the
mode is the most frequent value, it is the point on the histogram where the graph is highest.
Since the median is in the middle of a distribution (so it divides the distribution in half).
Now the question is: if the mean is less than the median, then the distribution is said to be
skewed to (a) left or right?
Conversely, if the mean is greater than the median, then the distribution is skewed to the
(b) left or right?

Problem5
Match the value of the correlation to the data in the scatterplot.
(a) r=0 (b) r= -0.9 (c) r=1 (d) r=0.4

Problem 6
The distribution of vehicle prices tends to be right skewed, with a few luxury and sports
cars lingering out into the right tail. If you were searching for a new car and cared about
price, should you be more interested in the mean or median price of vehicles sold,
assuming you are in the market for a regular car?

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Problem 7
After the collapse of the stock market in October 1987, Business Week polled its readers
and asked whether they expected another big drop in the market during the next 12
months. The data table for this question has two variables. One indicates whether the
reader owns stock and the others gives the anticipated chance for another drop.

(a) Check this contingency table defined by stock ownership and the anticipated chances
for a big drop in the market. Please find the marginal distributions.

Stockholders Non stockholders

Very 18 26
likely
Somewhat 41 65
likely
Not very 52 68
likely
Not likely 19 31
at all
Unsure 8 13

(b) What is the proposition of stockholders who think that a drop was either somewhat
likely or very likely?
(c) What is the proposition of non-stockholders who think that a drop was either somewhat
likely or very likely?

Problem 8
Represent each of the following sets by completing the Venn diagram.
(a) A = e, p, r, z (b) C = 2, 5, 8, 11, 15
B = m, e, q D = 8, 15

U U
B m e D
8
q
15

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Problem 9
For each part, compare distributions (1) and (2) based on their medians and Interquartile
range (IQR).

(a) (1) 3, 5, 6, 7, 9 (2) 3, 5, 6, 7, 20

(b) (1) 3, 5, 6, 7, 9 (2) 3, 5, 8, 7, 9
(c) (1) 1, 2, 3, 4, 5 (2) 6, 7, 8, 9, 10
(d) (1) 0, 10, 50, 60, 100 (2) 0, 100, 500, 600, 1000

Problem 10
The following contingency table summarizes the number of students at a college
who have a Mastercard and/or a Visa credit card.

Have Do Not Total

Visa Have Visa

Have 1,000 1,500 2,500

Mastercard

Do Not Have 3,000 4,500 7,500

Mastercard

4,000 6,000 10,000

Total

(a) Find the proportion of Mastercard holders who have VISA cards. Interpret and
write this proportion as a conditional probability.
(b) Find the proportion of VISA cardholders who have Mastercards. Interpret and
write this proportion as a conditional probability.
(c) Are the events having a Mastercard and having a VISA independent?

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Problem 11
A company administers an “aptitude test for managers” to aid in selecting new
management trainees. Prior experience suggests that 60 percent of all applicants for
management trainee positions would be successful if they were hired. Furthermore,
past experience with the aptitude test indicates that 85 percent of applicants who
turn out to be successful managers pass the test and 90 percent of applicants who
do not turn out to be successful managers fail the test.
(a) If an applicant passes the “aptitude test for managers,” what is the probability
that the applicant will succeed in a management position?
(b) Based on your answer to part a, do you think that the “aptitude test for managers”
is a valuable way to screen applicants for management trainee positions?

Problem 12
Which of the following descriptive tools can be used to analyze the relationship
between two variables?
(a) Bar Chart
(b) Histogram
(c) Polygon
(d) Scatter Plot