Business Statistics Problems

(ISOM2500)[2015](s)midterm~skyau^_91254.pdf downloaded by cociutara from http://petergao.net/ustpastpaper/down.php?course=ISOM2500&id=4 at 2015-07-04 06:17:47. Academic use within HKUST only.
ISOM 2500
Sample Questions Solution_ Exam 1
K.H.Chen
Problem 1
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
Ans: D
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.
Ans:
(a) IV
(b) II
(c) I
(d) III
Problem 3
What percent of the data fall between Q1 and the median? What percent is between the
median and Q3?
Ans:
Since Q1 and Q3 capture the middle 50% of the data and the median splits the data in the
middle,25% of the data fall between Q1 and the median, and another 25% falls 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?
Ans:
(a)
It will be spread widely to the left. Here is an example of a distribution that is skewed to the
left:
(b)
It will be spread widely to the right. Here is an example
of a distribution that is skewed to the 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
Ans:
(a) III
(b) I
(c) II
(d) IV
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?
Ans:
Buyers of a regular car" should be concerned about the median price. High-end car sales
can drastically inflate the mean price while the median will be more robust to the influence
of those sales.
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.
Very
likely
Somewhat
likely
Not very
likely
Not likely
at all
Unsure
Stockholders
Non stockholders
18
26
41
65
52
68
19
31
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?
Ans:
Very likely
Somewhat likely
Not very likely
Not likely at all
Unsure
Total
Stockholders
Non stockholders
Total
18
41
52
19
8
138
26
65
68
31
13
203
44
106
120
50
21
341
(a) This table adds the marginal counts.

(b) (18+41)/138 = 42.75% of stockholders anticipated another drop.
(c) Among non-stockholders, the percentage expecting another drop is slightly higher,
(26+65)/203 = 44.83%
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
8
15
Ans:
(a) U
(b) U
B
e
q
C
5
2
8
15
11
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
(b) (1) 3, 5, 6, 7, 9
(c) (1) 1, 2, 3, 4, 5
(d) (1) 0, 10, 50, 60, 100
(2) 3, 5, 6, 7, 20
(2) 3, 5, 8, 7, 9
(2) 6, 7, 8, 9, 10
(2) 0, 100, 500, 600, 1000
Ans:
(a) Both distributions have the same median and second distribution has higher IQR.
(b) Second distribution has a higher median and higher IQR.
(c) Second distribution has higher median. IQRs are equal.
(d) Second distribution has higher median and larger IQR.
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
Mastercard
1,000
1,500
2,500
Do Not Have
Mastercard
3,000
4,500
7,500
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?
Ans:
(a) The conditional probability will be
P(Have VisaHave Mastercard) =1,000/2,500=40%.
(b) The conditional probability will be
P(Have MastercardHave Visa )=1,000/4,000=25%.
(c) We find that (1,000/1,500)=( 3,000/4,500). They have the same ratio so it is
independent.
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?
Ans:
We can draw a tree diagram
Pass
0.6*0.85
85%
60%
40%
Successful
Not
15%
Fail
0.6*0.15
10%
pass 0.4*0.1
Successful
90%
Fail
0.4*0.9
(a) P(Pass & Successful)/P(Pass)

=0.6*0.85/(0.6*0.85+0.4*0.1)=0.9273
(b) Yes. Not independent. It has the association. When we compare the proportion
of successful and not successful, the numbers are quite different (85% vs 10%).
Whether an applicant passes the test is highly related to the successful rate.

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What are some types of descriptive tools that can be used to analyze relationships between variables?

What percentage of data falls between the first and third quartiles?

(ISOM2500)[2015](s)midterm~skyau^_91254.pdf downloaded by cociutara from http://petergao.net/ustpastpaper/down.php?course=ISOM2500&id=4 at 2015-07-04 06:17:47. Academic use within HKUST only.

Sample Questions Solution_ Exam 1

(a) This table adds the marginal counts.

(a) P(Pass & Successful)/P(Pass)

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