Problem Set #1

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Questions 1 through 24 are multiple choice questions. Bold, underline, or highlight the
correct answers.

1. The difference between a sample mean and the population mean or the difference
between the means of two random samples is called:
A. nonresponse error.
B. selection bias.
C. sampling error.
D. nonsampling error.

2. The manager of the customer service division of a major consumer electronics company
is interested in determining whether the customers who have purchased a videocassette
recorder over the past 12 months are satisfied with their products. If there are 4 different
brands of videocassette recorders made by the company, the best sampling strategy
would be to use a:
A. simple random sample.
B. stratified random sample.
C. cluster sample.
D. self-selected sample.

3. When every possible sample with the same number of observations is equally likely to be
chosen, the result is called a:
A. simple random sample.
B. stratified random sample.
C. cluster sample.
D. biased sample.

4. If you randomly select a few school districts within a city and survey all of the students
from the districts selected, what sampling strategy are you using?
A. Simple random sampling.
B. Stratified random sampling.
C. Cluster sampling.
D. Biased sampling.

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5. Which of the following types of samples is almost always biased?
A. Simple random samples.
B. Stratified random samples.
C. Cluster samples.
D. Self-selected samples.

6. Sampling error is the result of a mistake made during the sampling process.
A. True
B. False

7. Cluster samples typically cost less but they also increase sampling error.
A. True
B. False

8. Your gender is a nominal variable.

A. True
B. False

9. Your final grade in a course (A, B, C, D, E) is an ordinal variable.

A. True
B. False

10. The values of quantitative data are categories.

A. True
B. False

11. Nominal data are also called qualitative or categorical data.

A. True
B. False

12. A variable is some characteristic of a population or sample.

A. True
B. False

13. With nominal data, there is one and only one way the possible values can be ordered.
A. True
B. False

14. You cannot calculate and interpret differences between numbers assigned to nominal
data.
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 A. True
B. False

15. Bar and pie charts are graphical techniques for nominal data. The former focus the
attention on the frequency of the occurrences of each category, and the later emphasizes
the proportion of occurrences of each category.
A. True
B. False

16. One of the advantages of a pie chart is that it clearly shows that the total percentages of
all the categories add to 100%.
A. True
B. False

17. The intervals (classes) in a histogram do not overlap.

A. True
B. False

18. The intervals (classes) in a histogram are equally wide.

A. True
B. False

19. The number of class intervals in a histogram depends on the number of observations in
the data set.
A. True
B. False

20. Observations that are measured at successive points in time is what type of data?
A. Time-series data
B. Cross-sectional data
C. Successive data
D. None of these choices.

21. Observations that are measured at the same time represent what type of data?
A. Time-series data
B. Cross-sectional data
C. Successive data
D. None of these choices.
22. The two most important characteristics revealed by the scatter diagram are the strength
and direction of the linear relationship.
A. True
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 B. False

23. If the data in a scatter diagram is scattered completely at random, what do you conclude?
A. There is no linear relationship between X and Y.
B. There is a strong linear relationship between X and Y.
C. There is a strong linear relationship between X and Y that is described by a horizontal
(flat) line.
D. None of these choices.

24. If two variables have a strong linear relationship, it means one variable is causing the
other variable to go up or down.
A. True
B. False

You must show your work for the following problems.

25. A statistics professor classifies his students according to their grade point average (GPA)
and their gender as shown in the table below.

Gender Under 2.0 2.0 – 3.0 Over 3.0

Male 5 25 10
Female 10 20 30

1) What percent of his students are from male students?

40/100=0.4x100 =40%
2) What percent of his students have a GPA over 3.0?
3) 40/100=0.4x100 =40%

4) What percent of the male students have a GPA under 2.0?

5/40=.125x100= 12.5%
5) What percent of the students who have a GPA over 3.0 are female students?
30/40=.75x100= 75%
26. Suppose at the beginning of year 1, you decide to invest $3000. The following table
shows the returns for 8 years. It would be easier to convert the percentages below to
decimals.

Year Annual Return (%)

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 1 12.6%
2 5.8%
3 3.2%
4 -8.9%
5 6.9%
6 -15.9%
7 -9.3%
8 -18.7%

1) Calculate the arithmetic mean return. Show your work.

$3,197.52
2) Calculate the geometric mean return. Show your work. The geometric mean
should be less than the arithmetic mean.
$3,158.59
3) How much money would you have accumulated by the end of year 8? Use the
geometric mean in your calculation. Show your work.
$2,227.48

Beginning of
Annual Return End of year price
year price
$3000+3000x0.126=
12.6%=0.126 $3000
$3378
$3378+
5.8%=0.058 $3378 $3378x0.058=$3573
.92
$3573.92+
3.2%=0.032 $3573.92 $3573.92x0.032=$3
688.29
$3688.29-
-8.9%=-0.089 $3688.29 $3688.29x0.089=$3
360.03
$3360.03+
6.9%=0.069 $3360.03 $3360.03x0.069=$3
591.87
$3591.87-
-15.9%=-0.159 $3591.87 $3591.87x0.159=$3
020.77
-9.3%=-0.093 $3020.77 $3020.77-
$3020.77x0.093=$

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 $2739.83
$2739.83-
-18.7%=-0.187 $2739.83 $2739.83x0.187=$2
227.48
Total $25580.19

27. Refer to the data below. Suppose X is the independent variable and Y is the dependent
variable. Calculate the following statistics by constructing the 12-colume table. Round to
2 decimal places.

Variance of X, S2X 4
Standard deviation of X, S X 2
Variance of Y, S2Y 7.78
Standard deviation of Y, SY 2.78
The covariance between X and Y, S XY 146.1
The correlation coefficient between X and Y, r 0.97
The slope of the regression line, b 1 4.09
The Y intercept of the regression, b 0 1.64
ESS
RSS
TSS
R-square of the regression line, R2 0.97
Predict the value of Y when X=10

X Y
5 13
3 15
6 7
3 12
4 13

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4 11
6 9
9 8