1. When constructing a confidence interval, which case is preferable?

A. Large confidence level, small confidence interval

B. Small confidence level, small confidence interval
C. Small confidence level, large confidence interval
D. Large confidence level, large confidence interval

2. Assume that male weights are normally distributed with a national average of
165.7 lbs. The probability of an individual chosen at random having a weight of
greater than 190 lbs. is 25%. The probability that the mean weight of a sample of
40 men being greater than 190 lbs. is 2%. This rather large difference is due to the
fact that

A. Standard deviation of samples is larger than the standard deviation of the

population
B. The distribution of sample means is less variable than the distribution of
individual data
C. Sampling error may have occurred during the research
D. The mean of the sample means varies from the population mean

3 The 68.3% confidence interval for a population mean (with known population
standard deviation and sufficiently large sample size) has a margin of error of
20. If we quadruple the sample size, but have the same margin of error for the
new confidence interval, the approximate confidence level associated with the
new confidence interval would be

A. 99%
B. 90%
C. 95%
D. Cannot be determined without more information

4 A retail store buys imported apparel from a cheap offshore supplier. The clothing
is not of top quality, but the customers like the low price. The retailer would like
to know the defective rate of apparels to within a margin of error of 0.05 (95.4%
confidence). Regardless of the true defect rate, the smallest sample size that
guarantees this margin for error is

A. 25 items
B. 100 items
C. 200 items
D. 400 items
 (Q5– Q6) A private equity firm is considering purchasing a chain of retail clothing stores.
Preliminary to the purchase, it has obtained data on the level of sales at 64 retail
outlets of the chain. The data gives the sales in dollars per square foot per year. In
order for the acquisition to be profitable, the stores must produce sales in excess
of $380 per square foot annually.

5. Each store in this chain has approximately 6,000 square feet of retail space. The
95% confidence interval for the expected total sales during a year at a store in this
chain is approximately

A. $6,370,000 to $6,433,000
B. $2,220,000 to $2,600,000
C. $2,409,328 to $2,409,391
D. $2,409,106 to $2,409,614

6. Had the analysis been conducted with a larger sample of 256 stores, then we can
be assured that

A. The sample mean would have been larger

B. The sample standard deviation would have been smaller
C. The confidence interval for μ would be about ½ as long as shown
D. The confidence interval for μ would be about ¼ as long as shown
7. The owner of a Pizza delivery restaurant is concerned about meeting the
delivery time target of 30 minutes. He has kept close track of the delivery
times over a very long period and has found that they follow a normal
distribution with mean of 25 minutes and standard deviation of 5 minutes. If the
proportion of delayed deliveries now becomes 0.25, what is the new mean
duration of the delivery process? Assume that the standard deviation remains
unchanged.

A. 22.1
B. 26.7
C. 32.5
D. 35.2

8. A company’s manufacturing process uses 500 gallons of water at a time. A

“scrubbing” machine then removes most of a chemical pollutant before pumping
the water into a nearby lake. To meet federal regulations the treated water must
not contain more than 80 parts per million (ppm) of the chemical. Because there is
a fine charged if regulations are not met, the company sets the machine to attain
an average of 75 ppm in the treated water. The machine’s output can be
described by a normal model with standard deviation 4.2 ppm. The company’s
lawyers insist that not more than 2% of the treated water should be over the limit.
In order to achieve this, to what mean should the company set the scrubbing
machine? Assume the standard deviation does not change.

A. 82 ppm
B. 75 ppm
C. 71 ppm
D. 85 ppm

9. Let X1 and X 2 be the means of two separate samples of size 25 each that are
randomly, and independently selected from the same population. Assume that
CLT conditions apply. Consider the following expressions: a =
P( − 0.2  X1   +  ) , and b = P( −   X 2   + 0.2 ) . Which of the following
statements is true?

A. a>b
B. a<b
C. a=b
D. Insufficient information

10. A basketball player shoots 60 free throws a day and historically makes 75 percent
of them. What is the probability that he will make at most 80 percent tomorrow?
 A. 0.10
B. 0.81
C. 0.19
D. 0.89

(Q11-12) You have recently joined a Weight Watchers club. Suppose that the number of times
you expect to visit the club in a month is represented by a normally distributed random variable
with a mean of 12 and a standard deviation of 2.50.

11. Over the course of the next year, what is the probability that you average more
than 13 visits to the club per month?

A. 0.16
B. 0.42
C. 0.34
D. 0.08

12. Suppose your friend also joins this club. The number of his visits to the club each
month is also a random variable and follows a similar distribution as yours. What
is the probability that the number of visits you do exceeds the number of visits by
your friend by 4 in any month?

A. 0.03
B. 0.13
C. 0.23
D. 0.43

13. As the value of sample proportion increases from 0.1 to 0.9, for a given level of
confidence, the precision of predicting the population proportion

A. Always increases
B. Always decreases
C. First increases, then decreases
D. First decreases, then increases

14. Terrahard Enterprises would like to estimate its share of the cloud storage market,
i.e., proportion of internet users who use their services to store files on a cloud,
with 98% confidence. If the margin of error tolerable to them is 1%, they should
choose a sample size of approximately

A. 10000
B. 13600
 C. 2500
D. 1000

Use the following information to answer the following two questions.

The owner of a food delivery service is concerned about meeting the delivery
time target of 30 minutes. He recorded the delivery times for a random sample of
196 food deliveries and found that the sample mean and standard deviation are
21 minutes and 4 minutes respectively. He also found that 28 of these deliveries
took over 30 minutes, which were to be given away for free.

15. What should be the owner’s estimate of the average time taken to deliver food?
(Assume 95% confidence level)

A. [20.04, 21.96]
B. [20.44, 21.56]
C. [20.34, 21.66]
D. [19.44, 22.56]

16. Which of the following statements is correct?

A. The owner can be 95% confident that not more than 20% of the times the food
delivery needs to be given away for free
B. The owner can be sure that roughly only 14% of the deliveries will have to be
given for free.
C. The 95% confidence interval for the percentage of free deliveries in the sample
is 9.4% to 19.2%
D. The percentage of free deliveries can be estimated as 14.3% with an
estimated standard error of 2.5%

17. Ratings of all project managers in a large multi-national company approximately

follow a normal distribution. It is known that 75 % of the project managers have a
rating of less than 80 out of 100. Similarly, 25 % of the project managers have a
rating of less than 60 out of 100. If only top 5 % of the project managers are
promoted to the position of program manager, what is the minimum rating that
would ensure promotion?

A. 100
B. 95
C. 90
D. 85
 18. A Market research division wants to estimate the proportion of consumers who
prefer their brand of cereal, labelled as X. A sample of n =
100 persons was randomly selected. Each person in the sample was given two
cereal boxes, one of brand X and another one of brand Y, with labels removed.
Each person has to report which brand they preferred. The following results were
obtained:

Number preferring X: 59
Number preferring Y: 37
Number of Ties: 4

Then the 99% confidence interval for the proportion of consumers in the population who
prefer brand X over brand Y is

A. [0.50, 0.75]
B. [0.25, 0.49]
C. [0.46, 0.72]
D. Cannot be determined

Use the below information to answer the next two questions.

The following is the histogram of the population data with mean 0.0035 and
standard deviation 0.0452.

Consider that we draw 10000 random samples each of size 15 from the
population. The histogram of the 10000 sample means is given below.

19. Which of the following is the most likely summary for the sample means data?

A. The standard deviation of the sample means data is 0.0105

B. The standard deviation of the sample means data is 0.0452
C. The standard deviation of the sample means data is 0.000452
D. The standard deviation of the sample means data is 0.0031

20. Consider that we take 10000 samples each of size 25 each from the same
population. Which of the following is the most likely histogram for the sample
means?
 A. B.

C. D.

21. We compute the (1−α)% confidence interval (CI) using the same α for both the
proportion of population who are in favor of the increase of tax on cigarettes to
pay for the healthcare reform and the proportion of population who are against
the increase of tax on cigarettes to pay for the healthcare reform. Then

A. the CI is wider for the proportion of population in favor of the increase of tax
B. the CI is wider for proportion of population against of the increase of tax
C. the width of the CI is the same in both cases
D. Cannot be determined, since 𝛼 is not given

22. Last month you obtained a sample of 400 checkout receipts from Reliance Fresh.
An 80% confidence interval was computed for the mean amount spent per receipt:
$17.50 to $32.50. Now your boss says he really would like a 95% confidence
interval for this data. Unfortunately, you threw out all the remaining information!
In spite of that, you are clever enough to determine the 95% confidence interval.
What is it?

A. $13.53 to $36.47
B. $15.38 to $34.62
C. $16.06 to $33.94
D. Cannot be determined

23. Dhanvin calculated a 95% confidence interval for the population mean of the
amount of aluminum in an automobile component, using the population standard
deviation, σ. The upper limit of the confidence interval turned out to be 367.6
grams. If he wanted to increase the confidence level to 99% and still have the
same width as that of the earlier 95% confidence interval, what should be the
increase in the sample size?
 A. 131%
B. 172%
C. 73%
D. 32%

24. Swetha was studying the impact of demonetization in the state of Meghalaya. She
had selected a simple random sample of 225 persons. 54 of the 225 persons felt
that demonetization was good for the economy. She built a 98% two-sided
confidence interval for the population proportion (𝜋) of persons who felt that
demonetization was good for the economy. What is the lower limit of this
confidence interval?

A. 0.2117
B. 0.2381
C. 0.1738
D. 0.2356

Use the following information to answer the following two questions.

A soft-drink bottle filling company wants to avoid under filling the bottles to
maintain quality standard. The number of ounces injected into a 12-oz bottle is
normally distributed with mean 12-oz and standard deviation of 0.04 oz. Bottles
that contain below 11.9 oz do not meet the company’s standard and are sold at
a reduced price of 5$ instead of 7$.

25. In the long run, what percentage of the bottles has to be sold at a discounted a
price?

A. 0.6%
B. 0.05%
C. 0.5%
D. 50%

26. When the bottle filling system’s belt is worn out, the number of ounces injected
into a 12-oz bottle is normally distributed with mean 11.95 oz and standard
deviation of 0.2 oz. If 20,000 bottles are filled with this faulty process, then on an
average the total revenue generated by these 20,000 bottles will be approximately

A. $124,000
B. $140,000
C. $100,000
D. $150,000

Use the following information to answer the following question..

 As a naïve investor you have been considering an investment instrument offering
risk free return at 0.15%. An investment manager suggests that you could invest
in IBM stocks offering mean returns as high as about 0.35%. To see if this is true,
you obtained monthly returns data of IBM stock from Jan 2010 to December 2015.
A familiar JMP summary of the dataset is provided to you below.

Mean 0.0034979
Std Dev 0.0452404
Std Err Mean 0.0053316
Upper 95% 0.0141288
Mean
Lower 95% -0.007133
Mean
N 72
Kurtosis 0.1544114

27. Which of these is a possible 99% CI for the mean returns for the IBM monthly
stock returns:
A. [-0.01061, 0.01761]
B. [-0.01061, 0.01061]
C. [-0.006133, 0.0131218]
D. [0, 0.0151218]