MAN5004: Statistics for Business Decision

Problem Set 1

Answer key

Chapter 1: Chapter Exercises, LMW page 14-17

1. Problem 5

Qualitative data is not numerical (e.g. color, gender), whereas quantitative data is numerical
(e.g. height, score).

2. Problem 6

A population is the entire group which you are studying. A sample is a subset taken from a
population.

3. Problem 7

Discrete variables can assume only certain values (e.g. number of students), but continuous
variables can assume any values within some range (e.g. temperature).

4. Problem 8
a. A population is used because the professor likely has grades readily available from every
student over the past 5 years.
b. A population is employed because the information is easy to find.
c. A population is used because the information is easy to find.
d. A sample works because it is difficult to locate every musical.

5. Problem 10
The cellphone provider is nominal level data. The minutes used are ratio level. Satisfaction is
ordinal level.

6. Problem 13

Discrete Continuous
b. Gender
d. Soft drink preference
Qualitative
g. Student rank in class
h. Rating of a finance professor
 c. Sales volume of MP3 players
a. Salary
Quantitative f. SAT scores
e. Temperature
i. Number of home computers

Discrete Continuous
Nominal b. Gender
d. Soft drink preference
Ordinal g. Student rank in class
h. Rating of a finance professor
Interval f. SAT scores e. Temperature
c. Sales volume of MP3 players
Ratio a. Salary
i. Number of home computers

7. Problem 18

The total amount spent is $603.86. The percents by group are: 75, 14, 4, and 7, respectively.

Chapter 2: Chapter Exercises, LMW page 44-49

8. Problem 23
a. Qualitative variables are ordinarily nominal level of measurement, but some are ordinal.
Quantitative variables are commonly of interval or ratio level of measurement.
b. Yes, both types depict samples and populations.

9. Problem 25
a. A frequency table.
b. Bar chart of the survey result.
 c. Pie chart of the survey result.

10. Problem 30 (data is included in the .zip file)

a. 6 because 25 = 32 < 45 < 64 = 26

b. 100, suggested as the interval must be larger than i ≥ 570 - 41 = 88.17
6
c. 0
d. Frequency distribution.
Class Frequency
0 up to 100 3
100 up to 200 12
200 up to 300 16
300 up to 400 10
400 up to 500 3
500 up to 600 1
Total 45

11. Problem 36

a. Cumulative frequency polygon

b. 250
c. 50 (found by 100 – 50)
d. $240,000
e. $230,000

12. Problem 46
a. 87.88%, found by 44.54% + 43.34%
b. Corporate taxes (8.31%) are more than license fees (2.9%)
c. 2.81 billion, found by (0.4454)(6.3), in sales taxes and
2.73 billion, found by (0.4334)(6.3), in individual taxes
Chapter 3: Chapter Exercises, LMW page 88-93

13. Explain the difference between a parameter and a statistic?

• A statistic is a characteristic of a small part of the population, i.e. sample. The parameter
is a fixed measure which describes the target population.
• The statistic is a variable and known number which depend on the sample of the population
while the parameter is a fixed and unknown numerical value.
• Statistical notations are different for population parameters and sample statistics, which are
given as under:

a. In population parameter, µ (Greek letter mu) represents mean, P denotes population

proportion, standard deviation is labeled as σ (Greek letter sigma), variance is
represented by σ2, population size is indicated by N, Standard error of mean is
represented by σx̄ , standard error of proportion is labeled as σp, standardized variate (z)
is represented by (X-µ)/σ, Coefficient of variation is denoted by σ/µ.
b. In sample statistics, x̄ (x-bar) represents mean, p̂ (p-hat) denotes sample proportion,
standard deviation is labeled as s, variance is represented by s2, n denotes sample size,
Standard error of mean is represented by sx̄ , standard error of proportion is labeled as
sp, standardized variate (z) is represented by (x-x̄ )/s, Coefficient of variation is denoted
by s/(x̄ )

14. Problem 64
a. Mean = 21.71, Median = 22.00
b. (23 - 21.7) + (19 - 21.7) + ... + (22 - 21.7) = 0

15. Problem 71

[15,300(4.5) + 10, 400(3.0) + 150,600(10.2)]

Xw = = 9.28
176,300

16. Problem 74

33,598
GM = 10 - 1 = 1.0300 - 1 = 0.03 or 3.0%
25,000

44,771
GM = 10 - 1 = 1.0599995 - 1 = 0.06 or 6.0%
25,000
17. Problem 84

Class M f f(M) M–µ (M – µ)^2 f(M – µ)^2

80 up to 100 90 3 270 –51.2 2621.44 7864.3
100 up to 120 110 8 880 –31.2 973.44 7787.5
120 up to 140 130 12 1560 –11.2 125.44 1505.3
140 up to 160 150 16 2400 8.8 77.44 1239.0
160 up to 180 170 7 1190 28.8 829.44 5806.1
180 up to 200 190 4 760 48.8 2381.44 9525.8
7060 33728

Chapter 4: Chapter Exercises, LMW page 120-131

18. Problem 32
a. 133, the 13th ordered value; 89, found by 81 + (97 – 81)/2; and 168, found by 162 + (174 –
162)/2.

200

150
Seniors

100

50
 b. 283.5, found by 283 + (284 – 283)/2; 189.75, found by 183 + (192 – 183) 3/4; and 492.5,
found by 490 + (500 – 490)/4.

600

500
Young Adults
400

300

200

100

c. The typical young adult has more than twice the number of CD’s as the typical senior
citizen.

19. Problem 39

Pearson’s coefficient is –0.2198, found by 3(7.7143 – 8)/ 3.9. Software coefficient is 0.0648,
found by 7(0.2779)/(7 – 1)(7 – 2).

20. Problem 40

Old machines are more costly to maintain.

21. Problem 42

Older customers tend to order very few condiments and young customers tend to order the
largest number.

22. Problem 43
a. 139,340,000, found by adding the four cells.
b. 5.4 % were unemployed, found by 7523/139340.
c. 5.6% of the men and 5.1% of the women
Chapter 17: Chapter Exercises, LMW page 648-651

23. Problem 46

1951.23
P= (100) = 1428.04
136.637

24. Problem 47

0.73(1000) + 2.12(5000) + 44.08(60,000) +1904.30(500)

P=
0.287(1000) + 0.17(5000) + 3.18(60,000) +133(500)
( )
100 = 1396.19

25. Problem 54
a. $0.420, found by 100/232.132
b. $2,939.55, found by ($7000)/238.132 × 100