Suppose a researcher is interested in understanding the variation in the price of store brand milk.

A
random sample of 36 grocery stores selected from a population and the mean price of store brand milk is
calculated. The sample mean is $3.13 with a standard deviation of $0.23. Construct a 99% confidence
interval to estimate the population mean.

a.
$2.90 to $3.36

b.
$3.06 to $3.20

c.
$3.12 to $3.14

d.
$3.03 to $3.23

e.
$3.05 to $3.21

The table t value associated with the upper 5% of the t distribution and 14 degrees of freedom is _______.

a.
1.761

b.
2.977

c.
2.145

d.
1.345

e.
2.624

A researcher wants to estimate the proportion of the population which possesses a given characteristic. A
random sample of size 800 is taken resulting in 360 items which possess the characteristic. The point
estimate for this population proportion is _______.

a.
0.70

b.
0.45

c.
0.35

d.
0.55

e.
0.65
Consider the following null and alternative hypotheses.

Ho: μ ≥ 67
Ha: μ < 67

These hypotheses _______________.

a.
indicate a one-tailed test with a rejection area in the right tail

b.
are established incorrectly

c.
indicate a two-tailed test

d.
are not mutually exclusive

e.
indicate a one-tailed test with a rejection area in the left tail

Consider the following null and alternative hypotheses.

Ho: μ = 67
Ha: μ ≠ 67

These hypotheses ______________.

a.
indicate a one-tailed test with a rejection area in the left tail

b.
indicate a two-tailed test

c.
are established incorrectly

d.
indicate a one-tailed test with a rejection area in the right tail

e.
are not mutually exclusive

In performing a hypothesis test where the null hypothesis is that the population mean is 4.8 against the
alternative hypothesis that the population mean is not equal to 4.8, a random sample of 25 items is
selected. The sample mean is 4.1 and the sample standard deviation is 1.4. It can be assumed that the
population is normally distributed. The degrees of freedom associated with this are _______.

a.
1

b.
26

c.
25

d.
24

e.
2
Ophelia O'Brien, VP of Consumer Credit of American First Banks (AFB), monitors the default rate on
personal loans at the AFB member banks. One of her standards is "no more than 5% of personal loans
should be in default." On each Friday, the default rate is calculated for a sample of 500 personal loans.
Last Friday's sample contained 30 defaulted loans. Ophelia's null hypothesis is _______.

a.
p = 0.05

b.
n = 0.05

c.
n = 500

d.
n = 30

e.
p > 0.05

A statistically significant result is _______________.

a.
a result that is unlikely due to chance.

b.
a result that leads to the rejection of the alternative hypothesis.

c.
a result that is likely due to chance.

d.
the same as a substantive result.

e.
a result that is important for decision makers.

Tamara Hill, fund manager of the Hill Value Fund, manages a portfolio of 250 common stocks. Tamara is
searching for a 'low risk' issue to add to the portfolio, i.e., one with a price variance less than that of the
S&P 500 index. Moreover, she assumes an issue is not 'low risk' until demonstrated otherwise. Her staff
reported that during the last nine quarters the price variance for the S&P 500 index (population 1) was 25,
and for the last seven quarters the price variance for XYC common (population 2) was 8. Assume that
stock prices are normally distributed in the population. Using α = 0.05, Tamara's null hypothesis is
_______.

a.
σ ≠ σ22
1
2 

b.
σ  = σ22
1
2

c.
s  < s22
1
2

d.
σ  > σ22
1
2

e.
σ12 < σ22
Tamara Hill, fund manager of the Hill Value Fund, manages a portfolio of 250 common stocks. Tamara is
searching for a 'low risk' issue to add to the portfolio, i.e., one with a price variance less than that of the
S&P 500 index. Moreover, she assumes an issue is not 'low risk' until demonstrated otherwise. Her staff
reported that during the last nine quarters the price variance for the S&P 500 index (population 1) was 25,
and for the last seven quarters the price variance for XYC common (population 2) was 8. Assume that
stock prices are normally distributed in the population. Using α = 0.05, Tamara's alternate hypothesis is
_______.

a.
σ  < σ22
1
2

b.
σ12 > σ22

c.
s12 < s22

d.
σ12 = σ22

e.
σ12 ≠ σ22

You are interested in determining the difference in two population means. You select a random sample of
8 items from the first population and 8 from the second population and then compute a 95% confidence
interval. The sample from the first population has an average of 12.2 and a standard deviation of 0.8. The
sample from the second population has an average of 11.7 and a standard deviation of 1.0. Assume that
the values are normally distributed in each population. The point estimate for the difference in means of
these two populations is ______.

a.
−0.5

b.
0.06

c.
0.2

d.
−0.2

e.
0.5

Suppose the owners of a new bed and breakfast establishment are interested in conducting an
experiment to determine effective advertisement strategies for increasing the number of reservations. The
bed and breakfast owners intend to rotate advertisements for 12 weeks between a travel website, a travel
magazine and a local billboard. Customers making reservations will be asked if they saw the
advertisement. In this experiment, the dependent variable is ________________.

a.
number of customer calls

b.
bed and breakfast establishment

c.
travel website

d.
advertisement venue

e.
number of reservations
Suppose the owners of a new bed and breakfast establishment are interested in conducting an
experiment to determine effective advertisement strategies for increasing the number of reservations. The
bed and breakfast owners intend to rotate advertisements for 12 weeks between a travel website, a travel
magazine and a local billboard. Customers making reservations will be asked if they saw the
advertisement. In this experiment, the independent variable is ________________.

a.
number of reservations

b.
travel website

c.
advertisement venue

d.
number of customer calls

e.
bed and breakfast establishment

Suppose the owners of a new bed and breakfast establishment are interested in conducting an
experiment to determine effective advertisement strategies for increasing the number of reservations. The
bed and breakfast owners intend to rotate advertisements for 12 weeks between a travel website, a travel
magazine and a local billboard. Customers making reservations will be asked if they saw the
advertisement. In this experiment, the independent variable has how many levels?

a.
0

b.
3

c.
1

d.
2

e.
4

As director of the employee wellness and productivity program in your company, you are interested in
comparing the effects of strength training, aerobic training, and yoga on decreasing rates of injury and
absenteeism. The company has 9 divisions with roughly the same number of employees, and you
randomly assign 3 divisions to participate in strength training, 3 to aerobic training, and 3 to yoga. Your
null hypothesis is ______.

a.
μ1  ≥ µ2  ≥ µ3

b.
μ1  ≠ µ2  ≠ µ3

c.
μ1  ≤ µ2  ≥ µ3

d.
μ1  = µ2  = µ3

e.
μ1  ≤ µ2  ≤ µ3
As director of the employee wellness and productivity program in your company, you are interested in
comparing the effects of strength training, aerobic training, and yoga on decreasing rates of injury and
absenteeism. The company has 9 divisions with roughly the same number of employees, and you
randomly assign 3 divisions to participate in strength training, 3 to aerobic training, and 3 to yoga. Your
alternative hypothesis is ______.

a.
µ1 ≠ µ2 ≠ µ3

b.
µ1 = µ2 = µ3

c.
at least one of the means is different from the others

d.
µ1 ≤ µ2 ≤ µ3

e.
µ1 ≥ µ2 ≥ µ3

According to the following graphic, X and Y have _________.

a.
weak negative correlation

b.
virtually no correlation

c.
strong negative correlation

d.
moderate negative correlation

e.
strong positive correlation
From the following scatter plot, we can say that between y and x there is _______.

a.
negative correlation

b.
perfect negative correlation

c.
perfect positive correlation

d.
virtually no correlation

e.
positive correlation

From the following scatter plot, we can say that between y and x there is _______.

a.
negative correlation

b.
positive correlation

c.
perfect negative correlation

d.
perfect positive correlation

e.
virtually no correlation
A quality manager is developing a regression model to predict the total number of defects as a function of
the day of week the item is produced. Production runs are done 10 hours a day, 7 days a week. The
explanatory variable is ______.

a.
number of defects

b.
number of production runs

c.
production run

d.
percentage of defects

e.
day of week

A quality manager is developing a regression model to predict the total number of defects as a function of
the day of week the item is produced. Production runs are done 10 hours a day, 7 days a week. The
dependent variable is ______.

a.
day of week

b.
percentage of defects

c.
number of production runs

d.
number of defects

e.
production run

Consider the following scatter plot and regression line. At x = 50, the residual (error term) is _______.

a.
imaginary

b.
unknown

c.
negative

d.
zero

e.
positive
For the following scatter plot and regression line, at x = 35 the residual is _______.

a.
positive

b.
imaginary

c.
negative

d.
unknown

e.
zero

The following residuals plot indicates _______________.

a.
the sample is biased

b.
a nonconstant error variance

c.
a nonlinear relation

d.
the simple regression assumptions are met

e.
a random sample
A manager wishes to predict the annual cost (y) of an automobile based on the number of miles (x) driven.
The following model was developed: y = 2,000 + 0.42x.

If a car is driven 15,000 miles, the predicted cost is ____________.

a.
2,090

b.
6,300

c.
8,400

d.
17,000

e.
8,300

A manager wants to predict the cost (y) of travel for salespeople based on the number of days (x) spent
on each sales trip. The following model has been developed: y = $400 + 120x. If a trip took 4 days, the
predicted cost of the trip is _____________.

a.
2080

b.
880

c.
524

d.
1080

e.
480
Abby Kratz, a market specialist at the market research firm of Saez, Sikes, and Spitz, is analyzing
household budget data collected by her firm. Abby's dependent variable is monthly household
expenditures on groceries (in $'s), and her independent variable is annual household income (in $1,000's).
Regression analysis of the data yielded the following tables.

  Coefficients Standard Error t Statistic p-value

Source df SS MS F
Regression 1 16850.99 16850.99 19.34446 Se = 29.51443

Residual 9 7839.915 871.1017     r2 = 0.682478

The correlation coefficient between the two variables in this regression is __________.

a.
0.682478

b.
-0.83

c.
-0.68

d.
0.83

e.
1.0008

The equation of the trend line for the data based on sales (in $1000) of a local restaurant over the years
2005-2010 is Sales = -265575 + 132.571 year. Using the trend line, the forecast sales for the year 2012 is
________.

a.
$1157.85

b.
$2673304

c.
$1157850

d.
$132571

e.
$1000327
In general, if companies with thousands of employees want to determine the average number of days of
work missed per employee due to illness during a year for its employee population, it would __________.

a.
estimate the proportion of days missed by each worker in the population and then multiply it by the
number of days in a year

b.
estimate the population mean using the mean of a random sample of employees

c.
compute the average for each employee in the population and then take the average

d.
calculate the population mean using the data for the employee population

Louis Katz, a cost accountant at Papalote Plastics, Inc. (PPI), is analyzing the manufacturing costs of a
molded plastic telephone handset produced by PPI. Louis's independent variable is production lot size (in
1,000's of units), and his dependent variable is the total cost of the lot (in $100's). Regression analysis of
the data yielded the following tables.

  Coefficients Standard Error t Statistic p-value

Source df SS MS F
Regression 1 9.858769 9.858769 12.22345 Se = 0.898
Residual 11 8.872 0.806545     r2 = 0.526341
Total 12 18.73077       

Louis's regression model is ________________.

a.
y = 3.996 + 0.358x

b.
y = -3.996 + 0.358x

c.
y = -0.358 + 3.996x

d.
y = 0.358 + 3.996x

e.
y = 3.996 - 0.358x