Slides by

JOHN LOUCKS
St. Edward’s University

© 2008 Thomson South-Western. All Rights Reserved

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I need Applications in Business and Economics help!

Chapter 1 Data and Statistics

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Data
Data Sources

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Descriptive Statistics Statistical Inference Computers and Statistical Analysis

© 2008 Thomson South-Western. All Rights Reserved

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Applications in Business and Economics
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Accounting Public accounting firms use statistical sampling procedures when conducting audits for their clients.

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Economics Economists use statistical information in making forecasts about the future of the economy or some aspect of it.

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Production A variety of statistical quality control charts are used to monitor the output of a production process. All Rights Reserved 4 .Applications in Business and Economics s Marketing Electronic point-of-sale scanners at retail checkout counters are used to collect data for a variety of marketing research applications. s © 2008 Thomson South-Western.

Applications in Business and Economics  Finance Financial advisors use price-earnings ratios and dividend yields to guide their investment recommendations. © 2008 Thomson South-Western. All Rights Reserved 5 .

analyzed. All Rights Reserved 6 .  The data collected in a particular study are referred to as the data set. © 2008 Thomson South-Western. and interpreted. summarized.Data and Data Sets s Data are the facts and figures collected.

Variables. © 2008 Thomson South-Western.  The set of measurements collected for a particular element is called an observation.  The total number of data values in a complete data set is the number of elements multiplied by the number of variables.Elements. All Rights Reserved 7 . and Observations  The elements are the entities on which data are collected.  A variable is a characteristic of interest for the elements.

All Rights Reserved 8 .00 365. Variables.67 0.33 0.86 0.40 17.86 1. Elements.13 Dataram NQ EnergySouth N Keystone N LandCare NQ Psychemedics N 74.Data.10 0. Data Sets. and Observations Observatio n Elemen t Stock Names Variable s Company Exchange Annual Earn/ Sales($M) Share($) 73.70 111.60 Data Set © 2008 Thomson South-Western.

© 2008 Thomson South-Western. All Rights Reserved 9 . The scale indicates the data summarization and The scale indicates the data summarization and statistical analyses that are most appropriate.Scales of Measurement Scales of measurement include: Scales of measurement include: Nominal Ordinal Interval Ratio The scale determines the amount of information The scale determines the amount of information contained in the data. statistical analyses that are most appropriate. contained in the data.

A nonnumeric label or numeric code may be used. attribute of the element. All Rights Reserved 10 . A nonnumeric label or numeric code may be used.Scales of Measurement s Nominal Data are labels or names used to identify an Data are labels or names used to identify an attribute of the element. © 2008 Thomson South-Western.

a numeric code could be used for Alternatively. 2 denotes Humanities. a numeric code could be used for the school variable (e. 1 denotes Business. All Rights Reserved 11 . 1 denotes Business. the school variable (e. and 2 denotes Humanities. and so on).g. 3 denotes Education.Scales of Measurement s Nominal Example: Example: Students of a university are classified by the Students of a university are classified by the school in which they are enrolled using a school in which they are enrolled using a nonnumeric label such as Business. Education. and so on.g. Humanities. © 2008 Thomson South-Western. Humanities. 3 denotes Education. and so on. so on). Alternatively. nonnumeric label such as Business. Education.

All Rights Reserved 12 .. © 2008 Thomson South-Western. the order or rank of the data is meaningful A nonnumeric label or numeric code may be used. A nonnumeric label or numeric code may be used.Scales of Measurement s Ordinal The data have the properties of nominal data and The data have the properties of nominal data and the order or rank of the data is meaningful.

g. Alternatively. © 2008 Thomson South-Western. Junior. 2 denotes Sophomore. or Senior.Scales of Measurement s Ordinal Example: Example: Students of a university are classified by their Students of a university are classified by their class standing using a nonnumeric label such as class standing using a nonnumeric label such as Freshman. Freshman. Junior. Sophomore.g. Sophomore. All Rights Reserved 13 . a numeric code could be used for the class standing variable (e. or Senior. and so on). 2 denotes Sophomore. Freshman. 1 denotes the class standing variable (e. and so on). 1 denotes Freshman. a numeric code could be used for Alternatively.

Interval data are always numeric © 2008 Thomson South-Western. Interval data are always numeric. and the interval between observations is expressed in the interval between observations is expressed in terms of a fixed unit of measure. terms of a fixed unit of measure. and The data have the properties of ordinal data..Scales of Measurement s Interval The data have the properties of ordinal data. All Rights Reserved 14 .

while Kevin has an SAT score of 1090. Melissa scored 115 has an SAT score of 1090. © 2008 Thomson South-Western.Scales of Measurement s Interval Example: Example: Melissa has an SAT score of 1205. points more than Kevin. All Rights Reserved 15 . Melissa scored 115 points more than Kevin. while Kevin Melissa has an SAT score of 1205.

This scale must contain a zero value that indicates This scale must contain a zero value that indicates that nothing exists for the variable at the zero point.Scales of Measurement s Ratio The data have all the properties of interval data The data have all the properties of interval data and the ratio of two values is meaningful. weight. height. that nothing exists for the variable at the zero point. weight. © 2008 Thomson South-Western. height. and time use the ratio scale. use the ratio scale.. and time Variables such as distance. and the ratio of two values is meaningful Variables such as distance. All Rights Reserved 16 .

All Rights Reserved 17 . Kevin has twice as many credit hours earned. hours earned as Melissa. © 2008 Thomson South-Western.Scales of Measurement s Ratio Example: Example: Melissa’s college record shows 36 credit hours Melissa’s college record shows 36 credit hours earned. Kevin has twice as many credit hours earned as Melissa. while Kevin’s record shows 72 credit hours earned. while Kevin’s record shows 72 credit earned.

there are more alternatives for statistical analysis when the data are quantitative. The statistical analysis that is appropriate depends The statistical analysis that is appropriate depends on whether the data for the variable are qualitative on whether the data for the variable are qualitative or quantitative. analysis when the data are quantitative. or quantitative. In general.Qualitative and Quantitative Data Data can be further classified as being qualitative Data can be further classified as being qualitative or quantitative. there are more alternatives for statistical In general. © 2008 Thomson South-Western. All Rights Reserved 18 . or quantitative.

All Rights Reserved 19 .Qualitative Data Labels or names used to identify an attribute of each Labels or names used to identify an attribute of each element element Often referred to as categorical data Often referred to as categorical data Use either the nominal or ordinal scale of Use either the nominal or ordinal scale of measurement measurement Can be either numeric or nonnumeric Can be either numeric or nonnumeric Appropriate statistical analyses are rather limited Appropriate statistical analyses are rather limited © 2008 Thomson South-Western.

.Quantitative Data Quantitative data indicate how many or how much: Quantitative data indicate how many or how much: discrete... if measuring how much continuous if measuring how much Quantitative data are always numeric. Quantitative data are always numeric Ordinary arithmetic operations are meaningful for Ordinary arithmetic operations are meaningful for quantitative data. quantitative data. © 2008 Thomson South-Western. All Rights Reserved 20 . if measuring how many discrete if measuring how many continuous.

Scales of Measurement Data Qualitative Quantitativ e Numerical Numerical Nonnumerical Nominal Ordinal Nomina Ordina Nomina ll l Interval Ratio © 2008 Thomson South-Western. All Rights Reserved 21 .

All Rights Reserved 22 . Example: data detailing the number of building Example: data detailing the number of building permits issued in June 2007 in each of the counties permits issued in June 2007 in each of the counties of Ohio of Ohio © 2008 Thomson South-Western.Cross-Sectional Data Cross-sectional data are collected at the same or Cross-sectional data are collected at the same or approximately the same point in time. approximately the same point in time.

Example: data detailing the number of building Example: data detailing the number of building permits issued in Lucas County. All Rights Reserved 23 . periods. Ohio in each of permits issued in Lucas County. Ohio in each of the last 36 months the last 36 months © 2008 Thomson South-Western.Time Series Data Time series data are collected over several time Time series data are collected over several time periods.

All Rights Reserved 24 .U. Government agencies .Data Sources s Existing Sources Within a firm – almost any department Business database services – Dow Jones & Co. Department of Labor Industry associations – Travel Industry Association of America Special-interest organizations – Graduate Management Admission Council Internet – more and more firms © 2008 Thomson South-Western.S.

Data Sources s Statistical Studies In experimental studies the variable of interest is In experimental studies the variable of interest is first identified. example © 2008 Thomson South-Western. In observational (nonexperimental) studies no In observational (nonexperimental) studies no attempt is made to control or influence the attempt is made to control or influence the variables of interest. a survey is a good variables of interest. Then one or more other variables first identified. Then one or more other variables are identified and controlled so that data can be are identified and controlled so that data can be obtained about how they influence the variable of obtained about how they influence the variable of interest. All Rights Reserved 25 . interest.

Cost of Acquisition Organizations often charge for information even when it is not their primary business activity. All Rights Reserved . Information may no longer be useful by the time it is available. 26 • • © 2008 Thomson South-Western.Data Acquisition Considerations Time Requirement • • Searching for information can be time consuming. Data Errors Using any data that happen to be available or were acquired with little care can lead to misleading information.

All Rights Reserved 27 .Descriptive Statistics s Descriptive statistics are the tabular. © 2008 Thomson South-Western. graphical. and numerical methods used to summarize and present data.

© 2008 Thomson South-Western. The costs of parts. are listed on the next slide. rounded to the nearest dollar.Example: Hudson Auto Repair The manager of Hudson Auto would like to have a better understanding of the cost of parts used in the engine tune-ups performed in the shop. All Rights Reserved 28 . She examines 50 customer invoices for tune-ups.

Example: Hudson Auto Repair s Sample of Parts Cost ($) for 50 Tuneups 91 71 104 85 62 78 69 74 97 82 93 72 62 88 98 57 89 68 68 101 75 66 97 83 79 52 75 105 68 105 99 79 77 71 79 80 75 65 69 69 97 72 80 67 62 62 76 109 74 73 © 2008 Thomson South-Western. All Rights Reserved 29 .

Tabular Summary: Frequency and Percent Frequency Parts Percent Parts Cost ($) Frequency Frequency 4 2 50-59 26 13 60-69 (2/50)10 32 16 70-79 0 14 7 80-89 14 7 90-99 10 5 100-109 100 50 © 2008 Thomson South-Western. All Rights Reserved 30 .

Graphical Summary: Histogram Tune-up Parts Cost 18 16 14 Frequency 12 10 8 6 4 2 Parts Cost ($) 50− 59 60− 69 70− 79 80− 89 90− 100-110 99 31 © 2008 Thomson South-Western. All Rights Reserved .

© 2008 Thomson South-Western. is $79 (found by summing the 50 cost values and then dividing by 50).Numerical Descriptive Statistics  The most common numerical descriptive statistic is the average (or mean). based on the 50 tune-ups studied. All Rights Reserved 32 .  Hudson’s average cost of parts.

Statistical Inference − Population the set of all elements of interest in a particular study Sample − a subset of the population − the process of using data obtained Statistical inference from a sample to make estimates and test hypotheses about the characteristics of a population Census− collecting data for a population Sample survey collecting data for a sample − © 2008 Thomson South-Western. All Rights Reserved 33 .

The sample data provide a sample average parts cost of $79 per tune-up.Process of Statistical Inference 1. 4. 3. unknown 2. A sample of 50 engine tune-ups is examined. © 2008 Thomson South-Western. Average cost of parts is unknown. All Rights Reserved 34 . The sample average is used to estimate the population average. Population consists of all tuneups.

All Rights Reserved 35 . © 2008 Thomson South-Western.  Instructions are provided in chapter appendices for carrying out many of the statistical procedures using Minitab and Excel.  Computer software is typically used to conduct the analysis.Computers and Statistical Analysis  Statistical analysis typically involves working with large amounts of data.

All Rights Reserved 36 .End of Chapter 1 © 2008 Thomson South-Western.

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