Course: GB213 Business Statistics Name:

Final Exam

READ BEFORE TAKING THE TEST:

 Time to complete the test: two hours.

 Open book/notes
 For all questions, show the work: you need to not only give an answer, but the steps necessary to
arrive at that answer.
 Round your numbers to 2 decimal places.

1. In 1988 hospitals spent 3.9 billion on computer systems. In 2001 this amount increased to $14.0
billion. What is the geometric mean annual increase for the period? (5 pts)

2. The Wachesaw Outpatient Center, designed for same-day minor surgery, opened last month.
Following is the number of patients served the first 16 days. (10 pts)

27 27 27 28 27 25 25 28 26 28 26 28 31 30 26 26

The information is to be organized into a frequency distribution.

a. How many classes would you recommend? (1 pts)
b. What class interval would you suggest? (1 pts)
c. What lower limit would you recommend for the first class? (1 pts)
d. Organize the information into a frequency distribution and determine the relative frequency
distribution. (3 pts)
e. Construct the cumulative frequency distribution (1 pts) and portray it graphically in
frequency polygon. (1 pts)
f. Comment on the shape of the distribution. (2 pts)
3. The industry standards suggest that 10% of new vehicles require warranty service within the first
year. Jones Nissan in Sumter, South Carolina, sold 12 Nissans yesterday. (8 pts; 4 pts each)
a. What is the probability that none of these vehicles requires warranty service?
b. What is the probability exactly one of these vehicles requires warranty service?
4. The National Grid Company is one of several domestic manufacturers of pipe. The quality
control department sampled 600 10-foot lengths. At a point 1 foot from the end of the pipe they
measured the outsider diameter. The mean was 14.0 inches and the standard deviation 0.1 inches.
(8 pts. 4 pts each)
a. If the shape of the distribution is not known, at least what percent of the observations will be
between 13.85 inches and 14.15 inches?
b. If we assume that the distribution of diameters is symmetrical and bell-shaped, about 95
percent of the observations will be between what two values?
5. The amount dispensed by a cola machine follow the normal distribution with a mean of 7 ounces
and a standard deviation of 0.10 ounces per cup. How much cola is dispensed in the largest 1% of
the cups? (5 pts)

6. At the downtown office of First National Bank there are 5 tellers. Last week the tellers made the
following number of errors each: 2, 3, 5, 3, and 5. (10 pts)
a. How many different samples of 2 tellers are possible? (2 pts)
b. List all possible samples of size 2 and compute the mean of each (2 pts)
c. Compute the mean of the sample means and compare it to the population mean. (3 pts)
d. State the Central Limit Theorem. (3 pts)

7. The mean age at which men in the United States marry for the first time is 24.8 years. The shape
and the standard deviation of the population are both unknown. For a random sample of 60 men,
what is the likelihood that the age at which they were married for the first time is less than 25.1
years? Assume that the standard deviation of the sample is 2.5 years. (8 pts)
8. A random sample of 20 retired Florida residents revealed they listened to the radio and
average (mean) of 40 minutes per day with a standard deviation of 8.6 minutes. Develop
a 95 percent confidence interval for the population mean listening time. (8 pts)

9. The Exchange Bank wishes to determine the mean balance on mortgages it holds. A
sample of 36 mortgages showed the mean balance to be $86,000 with a sample standard
deviation of $12,000. Would it be reasonable to conclude that the population mean is
less than $90,000? Use the .05 significance level. (8 pts)
10. A physician who specializes in weight control has three different diets she recommends.
As an experiment, she randomly selected 15 patients and then assigned 5 to each diet.
After three weeks the following weight losses, in pounds, were noted. At the 0.05
significance level, can she conclude that there is a difference in the mean amount of
weight loss among the three diets? (10 pts)

Plan A Plan B Plan C

5 6 7
7 7 8
4 7 9
5 5 8
4 6 9

ANOVA Table for the above data is as follows:

Source Sum of Squares df Mean Square F(computed) F(critical)
Treatment ? ? ? ? ?
Error ? ? 0.967
Total 37.73 ?
X

Using the 0.05 significance level: (a) state the null and alternate hypotheses for treatment;
(b) state the decision rule for treatments; (c) complete and ANOVA table above (put the
value next to the question mark); (e) give your decision regarding the hypothesis.
11. The city council of Pine Bluffs is considering increasing the number of police in an effort
to reduce crime. Before making a final decision, the council asks the Chief of Police to
survey other cities of similar size to determine the relationship between the number of
police and the number of crimes reported. The Chief gathered the following sample
information. (10 pts)
City Police Number of Crimes
Oxford 15 17
Starkville 17 13
Danville 25 5
Athens 27 7
Holgate 17 7
Carey 12 21
Whistler 11 19
Woodville 22 6
a. If we want to estimate crimes based on the number of police, which variable is the
dependent variable, and which is the independent variable? (2 pts)

According to the regression output shown below:

 . reg y x

Source SS df MS Number of obs = 8

F( 1, 6) = 19.49
Model 222.393634 1 222.393634 Prob > F = 0.0045
Residual 68.4813665 6 11.4135611 R-squared = 0.7646
Adj R-squared = 0.7253
Total 290.875 7 41.5535714 Root MSE = 3.3784

y Coef. Std. Err. t P>|t| [95% Conf. Interval]

x -.9596273 .2173962 -4.41 0.004 -1.491577 -.4276779

_cons 29.3882 4.143381 7.09 0.000 19.24971 39.52669

b. write the regression equation. (2 pts)

c. Interpret the coefficient -0.9596273, does it surprise you that the relationship is
inverse? (2 pts)

d. What is the coefficient of determination? What does this statistic tell you? (4 pts)

12. The administrator of a new paralegal program at Seagate Technical College wants to
estimate the grade point average (GPA) in the new program. He thought that high school
GPA, the verbal score on the Scholastic Aptitude Test (SAT), and the mathematics score
on the SAT would be good predictors of paralegal GPA. The data on 9 students are: (10
pts)

Student High School SAT Verbal SAT Math Paralegal

GPA GPA
1 3.25 480 410 3.21
2 1.80 290 270 1.68
3 2.89 420 410 3.58
4 3.81 500 600 3.92
5 3.13 500 490 3.00
6 2.81 430 460 2.82
7 2.20 320 490 1.65
8 2.14 530 480 2.30
9 2.63 469 440 2.33

Considering the following output.

. reg paralegalgpa highschoolgpa satverbal satmath

Source SS df MS Number of obs = 9

F( 3, 5) = 10.33
Model 4.3594607 3 1.45315357 Prob > F = 0.0139
Residual .703628528 5 .140725706 R-squared = 0.8610
Adj R-squared = 0.7776
Total 5.06308922 8 .632886153 Root MSE = .37513

paralegalgpa Coef. Std. Err. t P>|t| [95% Conf. Interval]

highschoolgpa 1.201374 .295513 4.07 0.010 .4417341 1.961015

satverbal .0016293 .0021471 0.76 0.482 -.0038901 .0071487
satmath -.0019393 .0020736 -0.94 0.393 -.0072697 .0033912
_cons -.4110716 .7823005 -0.53 0.622 -2.422039 1.599896

a. Global test of hypothesis: Does it appear that any of the regression coefficients
are not equal to zero? Explain or show your reasoning. (2 pts)

b. Test of hypothesis on each independent variable. Would you consider eliminating

the variables “verbal” and “math”? Let α = 0.05. Explain or show your reasoning.
(3 pts)
. reg paralegalgpa highschoolgpa

Source SS df MS Number of obs = 9

F( 1, 7) = 34.35
Model 4.2060623 1 4.2060623 Prob > F = 0.0006
Residual .857026927 7 .122432418 R-squared = 0.8307
Adj R-squared = 0.8065
Total 5.06308922 8 .632886153 Root MSE = .3499

paralegalgpa Coef. Std. Err. t P>|t| [95% Conf. Interval]

highschoolgpa 1.158886 .1977203 5.86 0.001 .6913522 1.626421

_cons -.4542376 .5541665 -0.82 0.439 -1.764633 .856158

c. The analysis has been rerun without “verbal” and “math”. See the above output.
How much has R-squared and adjusted R-squared changed from the previous
analysis? (2 pts)

d. Why do we prefer to use adjusted R-squared to measure goodness-of-fit of a

multiple regression model? (3 pts)