Understanding Business Statistics 1st Edition Freed Test Bank Download

Understanding Business Statistics 1st
Edition Freed Test Bank

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CHAPTER 6
TRUE/FALSE
1. A continuous random variable may assume only fractional values in an interval or

collection of intervals.
Ans: FALSE, LO: 1, Bloom: , Difficulty: Easy, Min:, AACSB:
2. The probability of a continuous random variable taking on a value within some

interval is the area under the graph of the probability density function.
Ans: TRUE, LO: 1, Bloom: , Difficulty: Easy, Min:, AACSB:
3. In a continuous probability distribution, area, not height, represents probability.
4. For a continuous probability distribution, it is possible to talk about the probability of

a random variable assuming a particular value, just like is done in a discrete
probability distribution.
5. For a continuous probability distribution, the probability is represented by the area

under the curve.
6. When playing a round of golf, the distance of the drive off the second tee in feet is
considered to be a continuous variable.
6-1
7. For a continuous uniform probability distribution, the probability is proportional to the
interval’s width.
8. For a continuous uniform probability density function, the height of the function
decreases as x increases.
9. In the graph of a continuous uniform probability function, the height of the function is
different for various values of x.
10. A random variable that has a normal distribution with a mean of zero and a standard
deviation of one is said to have a standard normal probability distribution.
Ans: TRUE, LO: 3, Bloom: , Difficulty:, Min:, AACSB:
11. A standard normal distribution is a normal distribution with a mean of 0 and a

standard deviation of 1.
12. Smaller values of the standard deviation result in a normal curve that is wider and
flatter.
Ans: FALSE, LO: 3, Bloom: , Difficulty: Medium, Min:, AACSB:
13. Approximately 68.3% of the values in a normal distribution will be within two
standard deviations of the distribution mean.
14. Approximately 95.5% of the values in a normal distribution will be within two
15. Approximately 99.7% of the values in a normal distribution will be within three
16. The exponential probability density function produces a downward sloping curve that
approaches the x axis as values of x gets larger.
6-2
17. In the exponential distribution the expected value (mean) and variance are the
same.
18. One of the interesting properties of the exponential distribution is its lack of memory.
6-3
MULTIPLE CHOICE
19. A continuous random variable would be an appropriate way to describe the outcome
of which of the following experiments?
a. the flavor of ice cream chosen by a randomly selected customer

b. the number of points a soccer team scores in its next game
c. the number of children born to a woman over the course of her lifetime
d. the commute time between a person’s home and that person’s workplace
e. the color of new car purchased by a customer
Ans: D, LO: 1, Bloom: , Difficulty: Easy, Min:, AACSB:
20. The number of customers that enter a store during one day is an example of:
a. a continuous random variable

b. a discrete random variable
c. either a continuous or a discrete random variable, depending on the number of
the customers
d. either a continuous or a discrete random variable, depending on the gender of
the customers
e. none of the above
Ans: B, LO: 1, Bloom: , Difficulty: Easy, Min:, AACSB:
21. For a continuous random variable x, the probability density function f(x) represents:
a. the probability at a given value of x

b. the area under the curve at x
c. both a and b
d. the height of the function at x
22. A uniform probability distribution is a continuous probability distribution where the

probability that the random variable assumes a value in any interval of equal length
is:
a. different for each interval

b. the same for each interval
c. either a or b depending on the magnitude of the standard deviation
d. either a or b depending upon the magnitude of the mean
6-4
23. Suppose that a random variable Y is uniformly distributed between 50 and 100.
What might Y represent?
a. the number of donuts that will be sold tomorrow at a local bakery

b. snow depth in inches next Saturday at a nearby ski resort
c. the number of students who will attend next week’s lecture on sustainability
d. the number of points scored by the winning team of the next women’s basketball
game at your college
e. the number of sandwiches sold at a local deli today
Ans: B, LO: 2, Bloom: , Difficulty: Medium, Min:, AACSB:
24. A standard normal distribution is a normal distribution with:
a. a mean of 1 and a standard deviation of 0

b. a mean of 0 and a standard deviation of 1
c. any mean and a standard deviation of 1.96
d. any mean and any standard deviation
25. The mean of a normally distributed random variable:
a. cannot be greater than the standard deviation of that variable

b. cannot be less than the standard deviation of that variable
c. cannot be negative
d. is always positive
d. none of the above
Ans: E, LO: 3, Bloom: , Difficulty: Medium, Min:, AACSB:
26. The standard deviation of a normally distributed random variable:
a. cannot be greater than the variance of that variable

b. cannot be greater than the mean of that variable
c. cannot be less than zero
d. both a and c are true
Ans: C, LO: 3, Bloom: , Difficulty: Easy, Min:, AACSB:
6-5
27. If X, a random variable, follows a normal distribution,
a. the shape of the distribution is bimodal

b. the shape of the distribution is positively skewed
c. the shape of the distribution is symmetric
d. the shape of the distribution is negatively skewed
d. a and c.
28. Which of the following is NOT a property of the normal probability distribution?
a. symmetry
b. the total area under the curve is always equal to 1
c. 99.7% of the time the random variable assumes a value within plus or minus one
standard deviation of its mean
d. the mean is equal to the median, which is also equal to the mode.
29. Which of the following is a property of the normal probability distribution?
a. the form, or shape, of the normal curve is often illustrated as a bell-shaped curve
b. two parameters, the mean and standard deviation determine the location and
shape of the distribution
c. the standard deviation determines the width of the curve; larger values result in
wider, flatter curves
d. approximately 99.7% of the values will be within three standard deviations of the
distribution mean
e. all of the above
Ans: E, LO: 3, Bloom: , Difficulty: Easy, Min:, AACSB:
30. Which of the following is NOT true of the normal probability distribution?
a. two parameters, the mean and the standard deviation, determine the location
and shape of the distribution
c. approximately 95.5% of the values will be within three standard deviations of the
distribution mean
d. the highest point is at the mean, which is also the median and the mode
e. the normal curve is symmetric
Ans: C, LO: 3, Bloom: , Difficulty: Medium, Min:, AACSB:
6-6
a. two parameters, the mean  and the standard deviation , determine the location
and shape of the distribution
c. approximately 68.3% of the values will be within two standard deviations of the
distribution mean
d. the highest point is at the mean, which is also the median and the mode
e. the standard deviation determines the width of the curve
a. the graph of the curve is the shape of a bell curve

b. the total area under the curve is always equal to 1.
c. approximately 99.7% of the time the random variable assumes a value within
plus or minus one standard deviation of its mean
d. the mean is equal to the median, which is also equal to the mode.
e. none of the above; all are characteristics
33. To determine probability using the standard normal distribution:
a. first calculate a z-score for a given data value x

b. use the formula x =  + z
c. first find the area associated with z
d. look in the standard normal table for the x value
Ans: A, LO: 3, Bloom: , Difficulty: Easy, Min:, AACSB:
34. For a standard normal distribution, a negative value of z indicates:
a. a mistake has been made in computations because z is always positive

b. the area corresponding to the z is negative
c. the z is to the left of the mean
d. the z is to the right of the mean
6-7
35. Which of the following best describes the exponential distribution?
a. it produces probabilities for intervals of space, time, or distance between

successive occurrences of a Poisson event
b. it is a discrete distribution that focuses on the number of events in a time period
c. it is similar to the normal distribution but focuses on distance
d. the mean and variance are the same
e. all of the above
36. Suppose that the probabilities for intervals of time between successive occurrences
of an event are described by an exponential distribution. The standard deviation of
this distribution:
a. is always less than the variance of the distribution

b. is always equal to the expected value of the distribution
c. is always greater than the variance of the distribution
d. is always equal to the variance of the distribution
e. a and b
37. Which of the following best describes the memoryless nature of the exponential
distribution?
a. it ignores any consideration of how long it has been since the last event occurred
b. it keeps track of everything that has occurred
c. it ignores any consideration of distance from the last event
d. it focuses only what has happened since the last two occurrences
e. a and b
Ans: A, LO: 4, Bloom: , Difficulty: Medium, Min:, AACSB:
FILL IN THE BLANK
38. For a random variable x, the probability density function f(x)

represents the height of the function at x.
a. discrete
b. continuous
c. binomial
d. Poisson
6-8
39. A probability distribution is a continuous probability distribution where

the probability that the random variable assumes a value in any interval of equal
length is the same for each interval.
a. uniform
b. normal
c. exponential
d. binomial
e. Poisson
40. A standard normal distribution is a normal distribution with a mean of and a

standard deviation of .
a. 1, 0
b. 0, 1
c. any value, 1.96
d. any value, any value
41. The distribution produces probabilities for intervals of space,

time, or distance between successive occurrences of a Poisson event.
a. uniform
b. normal
c. exponential
d. Poisson
e. Chi-square
6-9
PROBLEMS
42. Random variable x has a uniform distribution defined by the probability density
function below. Determine the probability that x has a value between 225 and 250.
1/100 for values of x between 200 and 300

f(x) =
0 elsewhere else
a. .325
b. .25
c. .50
d. .20
e. .225
function below. Determine the probability that x has a value of at least 220.

f(x) =
0 everywhere else
a. .65
b. .80
c. .75
d. .60
e. .85
function below. Determine the mean (expected value) of x.

f(x) =
0 everywhere else
a. 220
b. 280
c. 220
d. 250
e. 290
6-10
function below. Determine the variance of x.

f(x) =
0 everywhere else
a. 833.33
b. 766.67
c. 516.33
d. 993.67
e. 1033.33
function below. Determine the standard deviation of the random variable.

f(x) =
0 everywhere else
a. 32.45
b. 16.38
c. 22.81
d. 36.52
e. 28.87
47. The search time for a particular search term on Google is defined by the probability
density function below, where x = the random variable “time to produce a result in
milliseconds”. Determine the probability that the search will take between 251 and
251.5 milliseconds.

f(x) =
0 everywhere else
a. .20
b. .156
c. .125
d. .225
e. .10
6-11
milliseconds”. Determine the probability that the search will take no more than 253.5
milliseconds.

f(x) =
0 everywhere else
a. .50
b. .65
c. .70
d. .80
e. .90
milliseconds”. Determine the mean (expected value) of x.

f(x) =
0 everywhere else
a. 25.5
b. 252.5
c. 253.0
d. 225
e. 250.5
density function below, where x = random variable “time to produce a result in
milliseconds”. Determine the standard deviation of x.

f(x) =
0 everywhere else
6-12
a. 2.083
b. 3.001
c. 1.673
d. 2.298
e. 1.443
51. The useful life (in years) of a shingled roof in Oregon has a uniform distribution
described by the probability density function below. What proportion of roofs have a
useful life of between 28.5 years and 29.5 years?

f(x) =
0 everywhere else
a. .15
b. .10
c. .30
d. .25
e. .20
described by the probability density function below. What proportion of roofs have a
useful life greater than 29 years?

f(x) =
0 everywhere else
a. .60
b. .55
c. .40
d. .50
e. .35
6-13
described by the probability density function below. 40% of shingled roofs in Oregon
have a useful life between 27 years and how many years.

f(x) =
0 everywhere else
a. 32.5
b. 34
c. 33.2
d. 31
e. 30.6
Ans: D, LO: 2, Bloom: , Difficulty: Medium, Min:, AACSB:
described by the probability density function below. What is the standard deviation
of the useful life distribution?

f(x) =
0 everywhere else
a. 2.886
b. 3.446
c. 2.467
d. 4.890
e. 5.118
55. Suppose that the high temperature on an August day in Death Valley varies between
98 and 118 degrees Fahrenheit and is uniformly distributed over this range of
values. What is the probability that the high temperature will exceed 100 degrees on
an August day?
a. 10%
b. 50%
c. 90%
d. 95%
e. 100%
6-14
56. Suppose that the high temperature on an August day in Death Valley varies between
98 and 118 degrees Fahrenheit and is uniformly distributed over this range of
values. What is the expected value of the high temperature on an August day?
a. 33.3 degrees Fahrenheit

b. 100 degrees Fahrenheit
c. 108 degrees Fahrenheit
d. 125 degrees Fahrenheit
e. 216 degrees Fahrenheit
57. Suppose that the time that your employees spend reading and answering e-mail
each day varies between 1.5 and 3.5 hours and is uniformly distributed over this
range of values. What is the probability that an employee spends more than two
hours reading and answering e-mail?
a. 20%
b. 25%
c. 50%
d. 75%
e. 90%
58. Suppose that the time that your employees spend reading and answering e-mail
each day varies between 1.5 and 3.5 hours and is uniformly distributed over this
range of values. Determine the standard deviation of the “time spent reading and
answering e-mail” random variable.
a. 0.33 hours
b. 0.58 hours
c. 33%
d. 58%
e. 75%
6-15
59. For a normal distribution, find the area between the mean and a point 1.64 standard
deviations to the left of the mean.
a. .3554
b. .4909
c. .4881
d. .4495
e. .3749
60. For a normal distribution, find the area between the mean and a point 2.33 standard
deviations to the right of the mean.
a. .4901
b. .3980
c. .4756
d. .4985
e. .4292
61. For a normal distribution, find the area to the right of a value that is 1.96 standard
deviations below the mean.
a. .9162
b. .3554
c. .9750
d. .8790
e. .8997
62. For a standard normal distribution, find the area between z = -.67 and z = +.15.
a. .4692
b. .0239
c. .9756
d. .7328
e. .7024
6-16
63. For a standard normal distribution, find the area between z = +1.36 and z = + 2.22.
a. .4162
b. .0596
c. .1406
d. .3289
e. .0737
64. For a standard normal distribution, find the area between z = -1.68 and z = +1.4.
a. .8577
b. .8971
c. .8727
d. .0987
e. .1064
65. For a standard normal distribution, determine that probability that z is between 0 and
1.48; that is, find P(0 < z < 1.48).
a. .4265
b. .4793
c. .4850
d. .4949
e. .4306
66. For a standard normal distribution, determine that probability that z is greater than or
equal to 2.67; that is, find P(z > 2.6).
a. .0478
b. .0160
c. .0038
d. .1406
e. .1331
6-17
67. For a standard normal distribution, determine that probability that z is between 2.2
and 2.55; that is, find P(2.2 < z < 2.55).
a. .0085
b. .0583
c. .0116
d. .0012
e. .0487
68. For a standard normal distribution, determine that probability that z is between -1.1
and +1.4; that is, find P(-1.1 < z < 1.4).
a. .6549
b. .7335
c. .7835
d. .8023
e. .8772
69. What proportion of values in a normal distribution will be between the mean and a
point 1.75 standard deviations to the right of (or above) the mean?
a. .4599
b. .5464
c. .4013
d. .3997
e. .3761
70. What proportion of values in a normal distribution will be above 2.33 standard
deviations to the right of (or above) the mean?
a. .0802
b. .0126
c. .0221
d. .0099
e. .0398
6-18
71. What proportion of values in a normal distribution will be in an interval that starts at
2.0 standard deviations to the left of (or below) the mean and extends to 1.0
standard deviation to the right of (or above) the mean?
a. .7157
b. .8365
c. .8185
d. .9162
e. .8925
72. What proportion of values in a normal distribution will be in an interval that starts at
2.58 standard deviations to the left of (or below) the mean and ends at 1.96 standard
deviations to the left of (or below) the mean?
a. .0574
b. .0662
c. .0201
d. .1021
e. .0062
73. North Dakota Mining (NDM) describes its estimate of the amount of oil it will produce
next year from its western North Dakota operations with a normal distribution. The
distribution is centered on 5.2 million barrels and has a standard deviation of .7
million barrels. According to this distribution, how likely is it that NDM’s production
will be less than 4.5 million barrels?
a. .1736
b. .1587
c. .2019
d. .2794
e. .2823
will be between 4.8 and 6.0 million barrels?
6-19
a. .3944
b. .4162
c. .6406
d. .5596
e. .5886
million barrels. According to this distribution, there is a .005 probability that NDM’s
production will be greater than how many millions of barrels?
a. 6.4
b. 7.0
c. 6.1
d. 7.5
e. 6.8
will be between 5.5 and 6.5 million barrels?
a. .3577
b. .3997
c. .3022
d. .3508
e. .4049
77. A study reported by the Michigan State campus newspaper stated that the average
time MSU students spent studying last month was is 58.3 hours, with a standard
deviation of 14 hours. If the study time distribution is normal, what percentage of
students spent more than 70 hours studying?
a. .3749
b. .2454
c. .2005
d. .1772
6-20
e. .2823
students spent less than 60 hours studying?
a. .6026
b. .5948
c. .6368
d. .5478
e. .5753
students spent between 40 and 80 hours studying?
a. .8443
b. .7486
c. .8051
d. .7224
e. ..8962
deviation of 14 hours. Assume the study time distribution is normal. According to
study results, about 20% of MSU students spent less than how many hours last
month studying.
a. 44.6
b. 45.1
c. 43.2
d. 46.5
e. 40.0
6-21
81. JewelMist.com estimates the cost of relocating its headquarters to Los Gatos, CA
with a normal distribution centered on $9.5 million and having a standard deviation
of $1.1 million. According to this distribution, there’s a 45% chance that the cost will
be between $9.5 million and $ how many million. (Make $9.5 million the lower
boundary for your interval.)
a. 11.315
b. 10.783
c. 9.961
d. 11.652
e. 10.782
of $1.1 million. According to this distribution, there’s a 60% chance that costs will be
less than how many millions of dollars.
a. 9.367
b. 9.162
c. 8.756
d. 10.428
e. 9.775
of $1.1 million. JewelMist wants to budget for the move so that there’s only a 1%
chance that the actual cost will exceed the budgeted amount. JewelMist should
budget how many millions of dollars.
a. 11.725
b. 9.901
c. 11.882
d. 12.063
e. 10.926
6-22
84. Dallas Green Homes uses a normal curve to estimate next year’s demand. The
distribution has a mean of 163 units and a standard deviation of 36 units. According
to this demand distribution, how likely is it that demand will be less than 80 units?
a. .0362
b. .0551
c. .0104
d. .0989
e. .1127
to this demand distribution, how likely is it that demand will be between 180 and 240
units?
a. .303
b. .3621
c. .418
d. .2612
e. .405
to this demand distribution. If demand exceeds 95 units, the company will have to
expand. How likely is it that expansion will be necessary?
a. .9429
b. .9706
c. .9131
d. .9878
e. .8980
6-23
to this demand distribution, there’s a 5% chance that demand will be no more than
how many units.
a. 87.2
b. 123.4
c. 75.6
d. 103.6
e. 102.1
88. The speed of college tennis player Jaron Jackson’s first serve averages 125 mph,
with a standard deviation of 4 mph. If the distribution of service speeds is normal,
what proportion of Jaron’s serves will be between 120 and 130 mph?
a. .6232
b. .8421
c. .9736
d. .7888
e. .7226
what proportion of Jaron’s serves will be between 131 and 133 mph?
a. .0035
b. .044
c. .0923
d. .1087
e. .036
what proportion of Jaron’s serves will be less than 136 mph?
a. .9970
b. .8762
c. .8356
d. .9721
6-24
e. .9402
with a standard deviation of 4 mph. The distribution of Jaron’s serve speed is
normal. Jaron’s opponent today figures he can handle a serve speed up to 132 mph.
If this is the case, what proportion of Jaron’s serves will his opponent not be able to
handle?
a. .0989
b. .0324
c. .0401
d. .0201
e. .0034
Ans: C, LO: 3, Bloom: , Difficulty: Hard, Min:, AACSB:
with a standard deviation of 4 mph. The distribution of service speeds is normal.
Jaron’s opponent today is certain that he can return for a winner any serve that is
less than 116 mph. If this is true, what proportion of Jaron’s serves will his opponent
be sure to return for a winner?
a. .0341
b. .0923
c. .0014
d. .0122
e. .0763
Ans: D, LO: 3, Bloom: , Difficulty: Hard, Min:, AACSB:
93. Over a number of years, the average annual rate of return for Fidelity’s Capital
Appreciation mutual fund has been .17 with a standard deviation of .35. Assume
annual returns are approximately normally distributed around the average rate.
Using this historical information as the basis for the calculation, there is a 20%
probability that this fund will have a return greater than or equal to how much?
a. -.124
b. .198
c. .464
d. .3732
e. -. 293
6-25
94. Over a number of years, the average annual rate of return for Fidelity’s Contra
mutual fund has been .11 with a standard deviation of .23. Assume annual returns
are approximately normally distributed around the average rate. Using this historical
information as the basis for the calculations, there is a 50% probability that this fund
will have a rate of return between .05 and what value.
a. .402
b. .358
c. .290
d. .382
e. .394
95. Over a number of years, the average annual rate of return for Fidelity’s Blue Chip
Value mutual fund has been .08 with a standard deviation of .04. Assume annual
returns are approximately normally distributed around the average rate. Using this
historical information as the basis for your calculations, what is the probability of loss
over the next year if you put money into this fund?
a. .0130
b. .001
c. .0524
d. .0228
e. .0771
96. Over a number of years, the average annual rate of return for Fidelity’s International
Capital Appreciation mutual fund has been .035 with a standard deviation of .031.
Assume annual returns are approximately normally distributed around the average
rate. If you use this historical information as the basis for your calculations, the
probability that this fund will produce a positive return is:
a. .1292
b. .8718
c. .1571
d. .7882
e. .8534
6-26
97. At Netflix, the time it takes for a returned DVD to be re-filed and for the next DVD to
be submitted for shipping to the customer follows a bell-shaped pattern, with a mean
of 194 seconds and a standard deviation of 42 seconds. What proportion of the
“turnaround” times are less than 150 seconds?
a. .1823
b. .1459
c. .1312
d. .0782
e. .0536
“turnaround” times are between 200 and 220 seconds?
a. .1767
b. .1986
c. .2540
d. .3121
e. .2242
“turnaround” times are longer 180 seconds?
a. .7823
b. .6589
c. .7132
d. .6293
e. .6827
6-27
100. At Netflix, the time it takes for a returned DVD to be re-filed and for the next DVD
to be submitted for shipping to the customer follows a bell-shaped pattern, with a
mean of 194 seconds and a standard deviation of 42 seconds. In 25% of the
cases, “turnaround” time is less than how many seconds.
a. 156.4
b. 165.9
c. 122.3
d. 222.1
e. 219.5
Ans: B, LO: 3, Bloom: , Difficulty: Hard, Min:, AACSB:
101. The amount of natural gas that Taylor Exploration extracts daily at its Cane Creek
site in Utah has a normal distribution, with an average of 82,300 cubic feet and a
standard deviation of 12,400 cubic feet. On a randomly selected day, how likely is
it that between 88,000 and 104,000 cubic feet are extracted?
a. .2827
b. .3354
c. .2145
d. .1837
e. .2462
it that between 75,000 and 90,000 cubic feet are extracted?
a. .5623
b. .4386
c. .5165
d. .4548
e. .3927
6-28
it that more than 67,000 cubic feet are extracted?
a. .6734
b. .7546
c. .6219
d. .7830
e. .8907
it that less than 110,000 cubic feet are extracted?
a. .9871
b. .8974
c. .9443
d. .8257
e. .9028
standard deviation of 12,400 cubic feet. On a randomly selected day, it is 68.3%
likely that the amount extracted will be between 69,900 and how many cubic feet.
a. 87,600
b. 91,220
c. 96,720
d. 93,000
e. 94,700
Ans: E, LO: 3, Bloom: , Difficulty: Hard, Min:, AACSB:
6-29
106. Charanka Solar Park in India reports that it produces an average of 16,400 kilowatt
hours (kwh) of electricity per day, with a standard deviation of 2200 kwh. If this
electrical output has a normal distribution, for what proportion of days would we
expect the day’s output to be between 15000 and 18000 kwh?
a. .4520
b. .6535
c. .4421
d. .5062
e. .3879
electrical output has a normal distribution, for what proportion of days would we
expect the day’s output to be less than 12000 kwh?
a. .0112
b. .0562
c. .0228
d. .0781
e. .1067
electrical output has a normal distribution we would expect that on 95% of the
days, the day’s output would be between 12,090 kwh and how many kwh.
a. 18,600
b. 20,710
c. 16,320
d. 19,400
e. 15,350
6-30
electrical output has a normal distribution, on 80% of the days, we would expect
the day’s output to be between 13,580 kwh and how many kwh.
a. 22,300
b. 19,220
c. 25,100
d. 17,300
e. 26,380
electrical output has a normal distribution, on 99% of the days we would expect the
day’s output to be least how many kwh.
a. 11,270
b. 12,680
c. 13,420
d. 7,310
e. 5,660
Ans: A, LO: 3, Bloom: , Difficulty: Hard, Min:, AACSB:
111. North Pacific Cannery (NPC) in British Columbia cans an average of 1250 cases of
salmon daily, with a standard deviation of 40 cases. Assuming output has a normal
distribution, on what proportion of days is NPC’s output either less than 1180
cases or more than 1320 cases?
a. .0802
b. .1082
c. .1193
d. .0925
e. .1367
6-31
112. Kelso Motor Parts produces a car battery with a useful life that has a normal
distribution. Average life is 40,000 miles, with a standard deviation of 1500 miles.
What proportion of the batteries will have a useful life between 42,000 and 44,000
miles?
a. .157
b. .128
c. .088
d. .072
e. .163
What proportion of the batteries will have a useful life of less than 39,000 miles?
a. .2514
b. .1056
c. .2669
d. .1673
e. .2014
What proportion of the batteries will have a useful life of more than 43,000 miles?
a. .0472
b. .0913
c. .0367
d. .1005
e. .0228
6-32
Suppose the company wants to establish a warranty policy. Any battery not lasting
as long as the warranty mileage will be replaced free of charge. What warranty
mileage would you suggest to ensure that the company won't have to replace more
that 3% of the batteries sold?
a. 25,992 miles
b. 33, 206 miles
c. 37,180 miles
d. 40,210 miles
e. 43,822 miles
116. The average fee per student (an amount that includes activities fees, technology
fees, curriculum fees, etc.) at four-year colleges is $1043. The fee charges are
normally distributed with a standard deviation of $68. What proportion of students
pay fees between $950 and $1050?
a. .3326
b. .4545
c. .4140
d. .3672
e. .2997
fees, curriculum fees, etc.) at four-year colleges is $1043. The fee charges are
normally distributed with a standard deviation of $68. What proportion of students
pay fees less than $1100?
a. .7995
b. .8325
c. .9167
d. .8442
e. .8168
6-33
fees, curriculum fees, etc.) at four-year colleges is $1043. The fee are normally
distributed with a standard deviation of $68. If a student budgets $1075 for fees,
how likely is it that he/she will end up at least $50 short?
a. .1464
b. .2362
c. .1996
d. .1561
e. .1131
fees, curriculum fees, etc.) at four-year colleges is $1043. The fee are normally
distributed with a standard deviation of $68. To ensure no more than a 1% chance
of being short, a student should budget how much for fees.
a. $1182.27
b. $1201.44
c. $1078.34
d. $1437.85
e. $1343.76
120. Suppose that coffee sales at the Daily Grind are normally distributed with a mean
of 225 cups sold each day and a standard deviation of 35 cups. Baristas at the
Daily Grind receive a bonus if sales exceed 300 cups. What is the probability that
the baristas will receive a bonus on any given day?
a. 98.3%
b. 48.3%
c. 2.1%
d. 1.6%
e. 1.0%
6-34
121. In a recent year, the average marathon time for women in the US was 5 hours and
6 minutes (Source: Marathonguide.com). Suppose that marathon times are
normally distributed around this average with a standard deviation of 50 minutes.
What marathon time must a woman achieve in order to be among the fastest 10%
of marathon runners?
a. 3 hours and 26 minutes or less

b. 4 hours and 2 minutes or less
c. 4 hours and 38 minutes or less
d. 6 hours and 10 minutes or less
122. US smartphone owners aged 18 to 24 send an average of 2,022 text messages

per month (Source: Businessinsider.com, 2013). Suppose that the random
variable “monthly text messages sent” is normally distributed. If exactly 20 percent
of smartphone owners aged 18 to 24 send 3000 or more texts per month, what is
the standard deviation of the random variable “monthly test messages sent”?
a. 404
b. 978
c. 1,164
d. 1,881
e. 2,196
123. Suppose that the amount of time it takes to develop a new iPhone app is normally
distributed with an average of 8 weeks and a standard deviation of 2 weeks. Fill in
the blank in the following sentence: “There is a 25% probability that development
time will be between how many weeks and 8 weeks.”
a. 2.0
b. 6.0
c. 6.7
d. 7.8
e. 8.6
6-35
124. Shelton Products’ website averages 4.0 visitors per minute. Visitor arrivals appear
random and unrelated. (Assume all the Poisson conditions are met.) How likely is it
that at least a minute will elapse before the next visitor arrives?
a. .1465
b. .0733
c. .0202
d. .0183
e. .1042
125. Shelton Products’ website averages 4.0 visitors per minute. Visitor arrivals appear
random and unrelated. (Assume all the Poisson conditions are met.) How likely is it
that no more than 15 seconds will elapse before the next visitor arrives?
a. .1539
b. .0733
c. .6321
d. .5298
e. .6856
126. Lionel receives an average of 3.0 text messages per minute. Assuming that all the
Poisson conditions are met for the random variable “number of text message
received in a minute,” determine the average time between messages (in
seconds).
a. 34
b. 40
c. 20
d. 10
e. 15
6-36
127. Lionel receives an average of 3.0 text messages per minute. Assuming that all the
Poisson conditions are met for the random variable “number of text message
received in a minute,” determine the standard deviation of the random variable
“time between text messages” in seconds.
a. 10
b. 30
c. 15
d. 34
e. 20
Ans: E, LO: 4, Bloom: , Difficulty: Easy, Min:, AACSB:
128. During late-night hours, the 10th Street convenience store averages four customers
per hour. No customers have arrived in the last half-hour. Assuming that all
Poisson conditions are met, determine the probability that the next customer won’t
arrive for at least 45 more minutes.
a. .0498
b. .0732
c. .1430
d. .4168
e. .0992
129. During late-night hours, the 10th Street convenience store averages four customers
per hour. No customers have arrived in the last half-hour. Assuming that all
Poisson conditions are met, determine the probability that the next customer
arrives in less than 10 minutes.
a. .3465
b. .4866
c. .3882
d. .2989
e. .4356
6-37
130. During late-night hours, the 10th Street convenience store averages four
customers per hour. No customers have arrived in the last half-hour. Assuming
that all Poisson conditions are met, determine the probability that it will be between
15 and 30 more minutes before the next customer arrives.
a. .2326
b. .3461
c. .2784
d. .3523
e. .2558
131. The waiting time before a caller is able to speak to a customer service
representative at Chase Bank is exponentially distributed, with an average waiting
time of 2.5 minutes How likely is it that a customer will wait at least 3 minutes?
a. .4264
b. .3012
c. .3684
d. .3248
e. .4036
time of 2.5 minutes. How likely is it that a caller will wait less than 2 minutes?
a. .4867
b. .5982
c. .5506
d. .4356
e. .5289
6-38
time of 2.5 minutes How likely is it that a caller will wait between 4 and 5 minutes?
a. .1623
b. .0666
c. .1265
d. .1892
e. .0934
134. The average (or expected) time it takes to complete a purchase at Trippler.com is
45 seconds. All the conditions for a Poisson distribution are met. Use the
exponential distribution to determine the probability that it will take at least 2
minutes to complete your next Trippler.com purchase.
a. .102
b. .134
c. .035
d. .07
e. .088
exponential distribution to determine the probability that it will take less than 30
seconds to complete your next Trippler.com purchase.
a. .3413
b. .3986
c. .4857
d. .4632
e. .4312
6-39
exponential distribution to determine the probability that it will take between 20
seconds and one minute to complete your next Trippler.com purchase.
a. .3803
b. .4012
c. .4623
d. .3919
e. .4451
137. Incidents involving serious engine problems on the DD-340 aircraft are rare. They
occur at an average rate of 3.0 per year (or .25 incidents per month). Assume all
Poisson conditions are met. Compute the average time, in months, between
incidents.
a. 5.1
b. 6.2
c. 3.2
d. 4
e. 4.8
Poisson conditions are met. Use the exponential distribution to determine the
probability that at least 6 months will elapse before the incident.
a. .2231
b. .1887
c. .1369
d. .1984
e. .1537
Poisson conditions are met. Use the exponential distribution to determine the
probability that no incidents occur during the next 6 months.
6-40
a. .1887
b. .1369
c. .1984
d. .2231
e. .1537
140. Suppose that we know that births at Northwest Hospital occur at an average rate of
1.6 births per hour. Assume all the Poisson conditions are met. What is the
probability that one hour or more will pass between successive births at the
hospital?
a. 0.20%
b. 4.95%
c. 20.2%
d. 49.5%
e. 54.5%
141. Births in the US occur at an average rate of 7.5 births per minute (Source:
Census.gov, 2013). Assume all the Poisson conditions are met. What is the
expected time (in minutes) between one birth and the next?
a. 0.13 minutes
b. 0.55 minutes
c. 7.5 minutes
d. 10.4 minutes
e. 13.3 minutes
142. Births in the US occur at an average rate of 7.5 births per minute (Source:
Census.gov, 2013). Assume all the Poisson conditions are met. What is the
standard deviation (in minutes) of the “time between births” random variable?
a. 0.13 minutes
b. 0.55 minutes
c. 7.5 minutes
d. 13.3 minutes
6-41
Answers to Questions
1. F 13. F 25. E 37. A 49. B 61. C
2. T 14. T 26. C 38. B 50. E 62. D
3. T 15. T 27. C 39. A 51. B 63. E
4. F 16. T 28. C 40. B 52. A 64. C
5. T 17. F 29. E 41. C 53. D 65. E
6. T 18. T 30. C 42. B 54. A 66. C
7. T 19. D 31. C 43. B 55. C 67. A
8. F 20. B 32. C 44. D 56. C 68. C
9. F 21. D 33. A 45. A 57. D 69. A
10.T 22. B 34. C 46. E 58. B 70. D
11. T 23. B 35. A 47. E 59. D 71. C
12. F 24. B 36. B 48. C 60. A 72. C
73. B 85. A 97. B 109. B 121. B 133. B

74. E 86. B 98. A 110. A 122. C 134. D
75. B 87. D 99. D 111. A 123. C 135. C
76. C 88. D 100.B 112. C 124. D 136. A
77. C 89. B 101. A 113. A 125. C 137. D
78. D 90. A 102. D 114. E 126. C 138. A
79. A 91. C 103. E 115. C 127. E 139. D
80. D 92. D 104. A 116. B 128. A 140. C
81. A 93. C 105. E 117. A 129. B 141. A
82. E 94. A 106. D 118. E 130. A 142. A
83. D 95. D 107. C 119. B 131. B
84. C 96. B 108. B 120. D 132. C
6-42

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Understanding Business Statistics 1st

Edition Freed Test Bank

1. A continuous random variable may assume only fractional values in an interval or

Ans: FALSE, LO: 1, Bloom: , Difficulty: Easy, Min:, AACSB:

2. The probability of a continuous random variable taking on a value within some

Ans: TRUE, LO: 1, Bloom: , Difficulty: Easy, Min:, AACSB:

3. In a continuous probability distribution, area, not height, represents probability.

Ans: TRUE, LO: 1, Bloom: , Difficulty: Easy, Min:, AACSB:

4. For a continuous probability distribution, it is possible to talk about the probability of

Ans: FALSE, LO: 1, Bloom: , Difficulty: Easy, Min:, AACSB:

5. For a continuous probability distribution, the probability is represented by the area

Ans: TRUE, LO: 1, Bloom: , Difficulty: Easy, Min:, AACSB:

Ans: TRUE, LO: 1, Bloom: , Difficulty: Easy, Min:, AACSB:

Ans: TRUE, LO: 2, Bloom: , Difficulty: Easy, Min:, AACSB:

Ans: FALSE, LO: 2, Bloom: , Difficulty: Easy, Min:, AACSB:

Ans: FALSE, LO: 2, Bloom: , Difficulty: Easy, Min:, AACSB:

Ans: TRUE, LO: 3, Bloom: , Difficulty:, Min:, AACSB:

11. A standard normal distribution is a normal distribution with a mean of 0 and a

Ans: TRUE, LO: 3, Bloom: , Difficulty: Easy, Min:, AACSB:

a. the flavor of ice cream chosen by a randomly selected customer

Ans: D, LO: 1, Bloom: , Difficulty: Easy, Min:, AACSB:

a. a continuous random variable

Ans: B, LO: 1, Bloom: , Difficulty: Easy, Min:, AACSB:

a. the probability at a given value of x

Ans: D, LO: 1, Bloom: , Difficulty: Easy, Min:, AACSB:

22. A uniform probability distribution is a continuous probability distribution where the

a. different for each interval

a. the number of donuts that will be sold tomorrow at a local bakery

Ans: B, LO: 2, Bloom: , Difficulty: Medium, Min:, AACSB:

24. A standard normal distribution is a normal distribution with:

a. a mean of 1 and a standard deviation of 0

Ans: B, LO: 3, Bloom: , Difficulty: Easy, Min:, AACSB:

25. The mean of a normally distributed random variable:

a. cannot be greater than the standard deviation of that variable

Ans: E, LO: 3, Bloom: , Difficulty: Medium, Min:, AACSB:

26. The standard deviation of a normally distributed random variable:

a. cannot be greater than the variance of that variable

Ans: C, LO: 3, Bloom: , Difficulty: Easy, Min:, AACSB:

a. the shape of the distribution is bimodal

Ans: C, LO: 3, Bloom: , Difficulty: Easy, Min:, AACSB:

Ans: C, LO: 3, Bloom: , Difficulty: Easy, Min:, AACSB:

29. Which of the following is a property of the normal probability distribution?

Ans: E, LO: 3, Bloom: , Difficulty: Easy, Min:, AACSB:

Ans: C, LO: 3, Bloom: , Difficulty: Medium, Min:, AACSB:

Ans: C, LO: 3, Bloom: , Difficulty: Medium, Min:, AACSB:

a. the graph of the curve is the shape of a bell curve

Ans: C, LO: 3, Bloom: , Difficulty: Medium, Min:, AACSB:

33. To determine probability using the standard normal distribution:

a. first calculate a z-score for a given data value x

Ans: A, LO: 3, Bloom: , Difficulty: Easy, Min:, AACSB:

34. For a standard normal distribution, a negative value of z indicates:

a. a mistake has been made in computations because z is always positive

Ans: C, LO: 3, Bloom: , Difficulty: Medium, Min:, AACSB:

a. it produces probabilities for intervals of space, time, or distance between

Ans: A, LO: 4, Bloom: , Difficulty: Easy, Min:, AACSB:

a. is always less than the variance of the distribution

Ans: B, LO: 4, Bloom: , Difficulty: Easy, Min:, AACSB:

Ans: A, LO: 4, Bloom: , Difficulty: Medium, Min:, AACSB:

FILL IN THE BLANK

38. For a random variable x, the probability density function f(x)

39. A probability distribution is a continuous probability distribution where

Ans: A, LO: 2, Bloom: , Difficulty: Easy, Min:, AACSB:

40. A standard normal distribution is a normal distribution with a mean of and a

Ans: B, LO: 3, Bloom: , Difficulty: Easy, Min:, AACSB: