ECONOMICS

In Economics, Utility refers to

a. the amount of electricity generated

b. the ability of a good to satisfy a want

c. tangible goods only

d. services only

Q2. When the federal government insures large financial institutions against losses, the problem of arises.

a. paradox of thrift

b. fallacy of composition

c. moral hazard

d. distribution

Q3. The interactions of producers and consumers in individual markets are part of the study of

a. macroeconomics

b. monetary economics

c. normative economics

d. microeconomics

Q4. Goods directly used by individuals and households are known as capital goods.

a. true

b. false

Q5. Concern with the level of employment in the economy is a macroeconomic issue.

a. true

b. false

Q6. In economics, scarcity means that

a. there are not enough resources for everything that people want

b. we can never feed every person in the country

c. the price of goods has increased more rapidly than the general price level d. there is not enough of a d particular good for everyone to buy all they want at the prevailing price

Q7. Which of the following is true of scarcity?

a. it applies to raw materials; manufactured goods are not scarce

b. it affects all countries except the United States and Canada

c. it affects only poor nations

d. it is a basic problem of economics that affects all nations

Q8. The ability of a nation to gain from specialization and exchange is affected by factors such as shipping costs and exchange rates.

a. true

b. false

Q9. An economy’s production possibilities curve could shift outward as a result of a(n)

a. Increase in labor and capital

b. reduction in the quantity of capital goods

c. decrease in the production of goods

d. decrease in the amount of available resources

Q10. The process by which nations limit their productive efforts to a particular activity instead of trying to produce directly everything that they need is known as

a. specialization

b. using absolute advantage

c. using exchange

d. scarcity

Q11. A problem with the use of the market system is that

a. it is too careful in conserving society’s resources

b. it does not stimulate people to work hard and to be efficient

c. it results in an unequal distribution of property and income

d. all of these

Q12. The owner of a sole proprietorship has

a. unlimited liability: if the firm goes bankrupt, the owner is liable for all debts

b. unlimited liability: if the firm goes bankrupt, the owner is liable for the amount of the investment

c. limited liability: if the firm goes bankrupt, the owner does not have to pay

d. unlimited liability: if the firm goes bankrupt, the owner is liable for the amount of the fixed assets only

Q13. Money that can be used to purchase capital goods is known as

a. financial capital

b. profit

c. liquid capital

d. interest

Q14. In a market economy, decisions about what to produce are made primarily by

a. the government

b. individuals and firms

c. firms in consultation with the government

Ã‚Â Ã‚Â Ã‚Â Ã‚Â d. a central planning committee

Q15. In a market economy, businesses are encouraged to produce because of

a. the profit motive

b. altruism

c. government direction

d. civic duty

Q16. The basic legal forms of business organization in the United States are the

a. corporation, sole proprietorship, and acquisition

b. sole proprietorship, corporation, cooperative, and partnership

c. partnership, cooperative, corporation, and subsidiary

d. sole proprietorship, corporation, partnership, and acquisition

Q17. The demand for a product at a given time is defined as the

a. desire for it

b. sum spent on it

c. measure of total utility for it

d. amount that would be bought at various prices

Q18. If a price ceiling of $3 is imposed on gasoline and the market price is $2,

a. the price of gasoline will rise

b. the price of gasoline will fall

c. the price of gasoline will remain unchanged

d. the demand for gasoline will increase

Q19. Which of the following is assumed to be constant along a demand curve for pet dogs?

a. the quantity of dogs demanded each time period

b. the price of dogs

c. the price of cats

d. the number of dogs people want to buy

Q20. The law of supply states that

a. as prices increase, quantity supplied decreases

b. price changes are always in the same direction as supply changes

c. a change in price causes a change in supply

d. Quantity offered by sellers of good or service is directly related to price

Q21. The effect of a change in the quantity sold of product A resulting from a change in the price of product B is measured by

a. price elasticity of demand

b. cross elasticity of demand

c. income elasticity of demand

d. promotional elasticity of demand

Q22. An increase in the number of consumers, all else held constant, will shift the

a. supply curve leftward

b. demand curve leftward

c. supply curve to the right

d. demand curve to the right

Q23. The total quantity of a good that all buyers in the market would buy at various prices at a given time is known as

a. individual demand

b. conglomerate demand

c. market demand

d. additive demand

Q24. Consider the market for bicycles. If a dealer cuts prices by 10 percent and sells 20 percent more bikes, then demand for bicycles is

a. inelastic, and total revenue will increase

b. elastic, and total revenue will increase

c. inelastic, and total revenue will decrease

d. elastic, and total revenue will decrease

Q25. A production function is

a. a technique for determining the most profitable rate of output

b. the relationship between resource inputs and product output

c. an important factor in determining the shape of the long-run supply curve

d. all of these

Q26. Which of the following is the best example of variable cost?

a. depreciation on a building

b. property taxes

c. wages

d. rent paid for one’s building

Q27. Total profit is equal to

a. total revenue minus total cost

b. total revenue minus explicit cost

c. total revenue minus variable cost

d. total revenue minus marginal cost

Q28. Total fixed cost is frequently referred to as

a. overhead

b. depreciation

c. opportunity cost

d. marginal cost

Q29. Whenever marginal revenue exceeds marginal cost,

a. profit declines if output increases

b. profit increases if output increases

c. losses increase if output increases

d. marginal revenue must be rising

Q30. If one firm in a perfectly competitive industry is somehow able to produce at a lower cost than competing firms in the short run,

a. the competing firms will adopt similar production techniques in the long run

b. the more efficient firm will earn higher profits than the competing firms in the long run

c. the competing firms will earn higher profits than the more efficient firm in the short run

d. the competing firms will go out of business in the long run

Q31. Under conditions of perfect competition, if a profitable firm pushes its output beyond the point where MR equals MC,

a. profits increase

b. profits diminish

c. AFC increases

d. AVC decreases

Q32. Under conditions of perfect competition, if losses occur in an industry, market forces may come into play to

a. reduce supply

b. lower average revenue

c. increase supply

d. attract new firms

Q33. Suppose that the development of a new, improved seed allows all corn farmers in the United States to increase their yields per acre. Since the demand for corn is relatively inelastic, the price of corn in a perfectly competitive market is likely to

a. not change, but farm revenues will fall

b. not change, but farm revenues will rise

c. increase, and farm revenues will fall

d. decrease, and farm revenues will fall

Q34. Under conditions of perfect competition, firms sell identical products.

a. true

b. false

Q35. A market structure in which two firms control the market is a

a. monopoly

b. monopolistic competition

c. perfect competition

d. duopoly

Q36. A monopolist that charges different prices to different buyers based on their elasticities of demand is practicing

a. first degree price discrimination

b. second degree price discrimination

c. third degree price discrimination

d. predatory pricing

Q37. Which of the following is not a potential source of monopoly?

a. patents

b. economies of scale

c. competitive tactics

d. civil rights

Q38. A monopoly can sell all that it desires at any given price.

a. true

b. false

Q39. A market structure in which only one seller of a product exists is known as

a. a monopoly

b. monopolistic competition

c. an oligopoly

d. perfect competition

Q40. Agreement between firms in an industry to set a certain price or to share a market is

a. a coordinating practice

b. a competitive practice

c. the substitution effect

d. a collusive practice

Q41. The oligopolist’s dilemma is similar to the

a. dilemma that firms in perfect competition face in setting price

b. dilemma a monopolist faces in determining output

c. prisoner’s dilemma

d. dilemma a firm in monopolistic competition faces in determining price and output

Q42. Monopolistic competition is a structure where,

a. each firm charges the same price

b. there are only two producers

c. there are many firms

d. products are identical

Q43. An effective way in which patents allow manufacturers to prevent the entry of new firms into the industry is through

a. creating perfectly inelastic demand

b. threats of infringement suits

c. creating tying contracts

d. threats of triple damages

Q44. In the long run, economic profits tend to be eliminated under conditions of monopolistic competition.

a. true

b. false

Q45. The amount of unemployment that arises because workers are temporarily between jobs or new entrants to the labor force is known as

a. structural unemployment

b. cyclical unemployment

c. frictional unemployment

d. induced unemployment

Q46. Persons who do not work because of bad weather or vacation are part of

a. the unemployed labor force

b. the employed labor force

c. frictional unemployment

d. cyclical unemployment

Q47. As the wage rate increases,

a. the demand for labor decreases

b. the demand for labor increases

c. the quantity demanded for labor decreases

d. the quantity demanded for labor increases

Q48. If sales in an industry decline,

a. demand for additional labor also declines

b. demand for additional labor increases

c. demand for additional labor stays the same

d. the unemployment rate definitely falls

Q49. Which type of unemployment is most likely to fall as a result of government policies that stimulate aggregate demand?

a. frictional unemployment

b. structural unemployment

c. natural unemployment

d. cyclical unemployment

Q50. Foreign outsourcing refers to the

a. exporting of domestic jobs

b. exporting of domestic goods

c. selling of Treasury bonds to foreigners

d. importing of oil from U. S. companies abroad

SECTION 2 FOR ECONOMICS

The Reciprocal Trade Agreement Act of 1934

a. increased the level of tariffs in the United States

b. was the first in a series of retaliatory trade acts passed by Congress

c. was the first in a series of Congressional acts reducing tariffs

d. increased the level of tariffs in the United States AND was the first in a series of retaliatory trade acts passed by Congress

Q2. Countries engage in trade because

a. the exchange is mutually beneficial

b. governments force industries to exchange

c. international law dictates that exchange must take place

d. all of these

Q3. Devices that set up multiple exchange rates between the currencies of two nations are known as

a. tariff quotas

b. export subsidies

c. exchange controls

d. variable currencies

Q4. Dumping refers to the practice of

a. flooding a foreign market with large quantities of a good

b. selling a product abroad at a price below cost or below the domestic price

c. exporting inexpensive products to foreign countries

d. selling surplus goods abroad with counterfeit brand names

Q5. A provision that permits raising tariffs if domestic producers are suffering under an existing tariff is known as

a. a trading bloc

b. exchange control

c. antidumping

d. an escape clause

Q6. Studies of income mobility show

a. many lower-income households remain in the lowest quintile over time

b. a welfare trap exists over time

c. many of the lower-income households climb to middle-income and even to upper-income classes over time

d. those in the highest-income quintile stay there permanently

Q7. Labor market discrimination refers to

a. differing economic opportunities offered to persons according to their productivity

b. wage differentials based on productivity differences

c. differing economic opportunities based on personal characteristics

d. wage differentials based on seniority and human capital

Q8. A country with an equal distribution of income will have a higher standard of living than a country with a more unequal distribution of income.

a. true

b. false

Q9. According to the U. S. Department of Commerce, all persons, unrelated or related, who occupy a housing unit comprise

a. a family unit

b. a household

c. an extended family unit

d. group living

Q10. Channeling people according to sex or race into particular occupations tends to

a. lower the wage rate in these occupations

b. increase the wage rate in these occupations

c. reduce income inequality among occupations

d. affect employment opportunities, but not wage rates

Q11. The size of the circular flow

a. measures the level of household purchases from business

b. measures the level of income and output

c. increases if there are more planned leakages

d. measures the level of prices

Q12. According to the simple circular flow concept, whenever planned investment is greater than planned saving during a period of less than full employment, there is a tendency for

a. total output to remain stable

b. prices to rise

c. employment to increase

d. inventories to accumulate

Q13. Excluded from the GDP are

a. military services

b. postal services

c. medical services

d. nonmonetary transactions

Q14. The difference between the cost of raw materials and the price of the final good is known as

a. value added

b. capital consumption allowance

c. a transfer payment

d. net national product

Q15. In the circular flow, investment refers to spending on

a. government bonds

b. certificates of deposit

c. capital goods

d. consumer goods

Q16. Population growth and wars are examples of external forces affecting the economy’s cyclical movements.

a. true

b. false

Q17. An example of an external force in business fluctuations is

a. falling interest rates due to lagging demand in a contraction

b. a devaluation in the nation’s currency

c. variations in inventories

d. the lag between price changes and cost changes

Q18. In an expanding economy,

a. prices rise faster than costs

b. costs rise faster than prices

c. profit margins decrease

d. interest rates fall

Q19. Economic indexes whose upward and downward turning points generally precede the peaks and troughs of general business activity are known as

a. causal indicators

b. leading indicators

c. roughly preceding indicators

d. primary indicators

Q20. In the pattern of the business cycle, generally

a. costs and prices move inversely

b. costs and prices move simultaneously

c. costs lead prices

d. costs lag behind prices

Q21. Which of the following is an example of supply-side economics?

a. increasing expenditures on public works projects

b. lowering the reserve requirement

c. enacting socioeconomic regulations

d. reducing marginal income tax rates

Q22. The aggregate demand curve

a. is identical to the AE curve

b. shows the amounts of real output that will be demanded at various price levels

c. shows the amount of real output that will be demanded at various levels of income

d. shows the amount of income that will be earned at various price levels

Q23. The size of planned consumption is influenced to a considerable extent by

a. the interest rate

b. whether or not the government is running a deficit

c. how much income people are receiving

d. expected profits

Q24. The purpose of the Keynesian analysis is to explain what determines the

a. size of the labor force

b. price level

c. amount of money required in the economy

d. levels of national income, output, and employment

Q25. The aggregate supply curve is

a. a curve showing the quantities of total output that business will purchase for investment at various price levels

b. a curve showing the quantities of total output that will be offered for sale at various price levels

c. a curve showing the quantities of goods and services that households will provide at various price levels

d. one point on the aggregate expenditure curve

Q26. The U. S. money supply measure that consists of currency plus travelers checks and checkable deposits is referred to as

a. M1

b. M2

c. M3

d. M1 + M2

Q27. Money is defined as

a. the currency of a nation

b. anything that is commonly accepted in exchange for other goods and services

c. currency that has been designated as legal tender

d. notes issued by the U. S. Treasury and backed by gold

Q28. Suppose that the Consumer Price Index increased from 100 to 120 between 2015 and 2016. Your nominal wages rose during the same period from $200 a week to $260. By how much did your real income rise?

a. 30 percent

b. 16. 7 percent

c. 8. 33 percent

d. 12 percent

Q29. A standard of deferred payment is most essential in a

a. barter economy

b. cash-only economy

c. credit economy

d. primitive economy

Q30. COLA clauses are usually based on the

a. CPI

b. PPI

c. implicit price deflators

d. level of unemployment

Q31. The Board of Governors of the Federal Reserve System is

a. under the jurisdiction of the U. S. president

b. responsible to the Secretary of the U. S. Treasury

c. independent within the U. S. government

d. responsible to the Council of Economic Advisors

Q32. Within certain limits, the reserve requirement for checkable deposits are established by

a. Congress

b. the U. S. president

c. each Federal Reserve Bank

d. the Board of Governors

Q33. The primary function of the Fed’s Board of Governors is to formulate U. S. monetary policy.

a. true

b. false

Q34. When the Fed conducts open-market operations, it primarily uses

a. Treasury bills

b. long-term U. S. government bonds

c. bonds of publicly traded corporations

d. overnight loans of major banks

Q35. The interest rate at which depository institutions borrow reserves from the Federal Reserve is known as the

a. prime rate

b. federal funds rate

c. discount rate

d. T-bill rate

Q36. Government demand-management policies that are used to try to increase the equilibrium level of output in the economy are known as

a. expansionary policies

b. fiscal dividends

c. output policies

d. laissez-faire policies

Q37. To most effectively combat inflation by raising taxes, the government should

a. target funds that would otherwise be held idle

b. also increase government spending

c. target households with low marginal propensities to consume

d. target funds that would otherwise be spent on consumption or investment

Q38. A disadvantage of using tax financing to fund an increase in government spending, which is designed to lower unemployment, is that

a. the taxes may absorb funds that would otherwise be used for consumption or investment

b. the taxes are unlikely to absorb funds that would otherwise be used for consumption or investment

c. a tax increase is likely to fuel inflation

d. the taxes may absorb funds that would otherwise be used to purchase imports

Q39. If the U. S. government increases spending, the U. S. Treasury

a. has the legal right to issue currency to pay for the spending

b. does not have the legal right to issue currency to pay for the spending

c. usually pays for the spending by selling bonds directly to the Fed

d. seldom pays for the spending by selling bonds to the public

Q40. The expansionary effect on the economy that results from a government budget deficit is known as a fiscal stimulus.

a. true

b. false

Q41. When the federal budget is used as a tool for economic stabilization, the ideal goal is to

a. balance the budget over the entire business cycle

b. balance the budget each year

c. balance the budget during expansions

d. run a surplus during contractions

Q42. The major advantage of the flat tax is its

a. simplicity

b. progressivity

c. fairness

d. use of tax credits

Q43. The best example of a direct tax is a(n)

a. excise tax

b. liquor tax

c. sales tax

d. income tax

Q44. The financial burden entailed in the paying of a tax is known as the

a. incidence of the tax

b. impact of the tax

c. effect of the tax

d. shift of the tax

Q45. The U. S. income tax is based on the principle of

a. cost of service

b. benefit received

c. ability to pay

d. equality of sacrifice

Q46. As foreign currency becomes less expensive in terms of the U. S. dollar,

a. foreign goods become cheaper to U. S. citizens

b. foreign goods become more expensive to U. S. citizens

c. the U. S. demand curve for foreign currency shifts to the left

d. the U. S. demand curve for foreign currency shifts to the right

Q47. Foreign citizens have been increasing their ownership of U. S. assets. This contributes to a U. S.

a. deficit on current account

b. deficit on financial account

c. surplus on current account

d. surplus on financial account

Q48. The rate at which two currencies are exchanged for each other is the

a. exchange rate

b. tariff rate

c. reserve rate

d. managed rate

Q49. The balance of payments includes

a. only exports, imports, and service transactions

b. the balance on current account, plus all capital transactions and all official transactions and the statistical discrepancy

c. only the official transactions

d. all goods and services produced in a nation’s economy during a given year

Q50. The International Monetary Fund was established to stabilize exchange rates and to provide temporary assistance to nations with deficit balance of payments.

a. true

b. false

STATISTICS SECTION 1

A statistics student found a reference in the campus library that contained the median family incomes for all 50 states. She would report her data as being collected using

a. a designed experiment.b. observational data.

c. a random sample.

d. a published source.

Q2. Which of the following is more likely a population than a sample?

a. respondents to a newspaper survey.

b. the first 5 students completing an assignment.

c. every third person to arrive at the bank.

d. registered voters in a county.

Q3. Most analysts focus on the cost of tuition as the way to measure the cost of a college education. But incidentals, such as textbook costs, are rarely considered. A researcher at Drummand University wishes to estimate the textbook costs of first-year students at Drummand. To do so, she monitored the textbook cost of 250 first-year students and found that their average textbook cost was $300 per semester. Identify the population of interest to the researcher.

a. All Drummand University students.

b. All college students.

c. All first-year Drummand University students.

d. The 250 students that were monitored.

Q4. Most analysts focus on the cost of tuition as the way to measure the cost of a college education. But incidentals, such as textbook costs, are rarely considered. A researcher at Drummand University wishes to estimate the textbook costs of first-year students at Drummand. To do so, she monitored the textbook cost of 250 first-year students and found that their average textbook cost was $300 per semester. Identify the variable of interest to the researcher.

a. The textbook cost of first-year Drummand University students.

b. The year in school of Drummand University students.

c. The age of Drummand University students.

d. The cost of incidental expenses of Drummand University students.

Q5. Researchers are concerned that the weight of the average American school child is increasing implying, among other things, that children’s clothing should be manufactured and marketed in larger sizes. IfÃ‚Â XÃ‚Â is the weight of school children sampled in a nationwide study, thenÃ‚Â XÃ‚Â is an example of

a. a categorical random variable.

b. a discrete random variable.

c. a continuous random variable.

d. a parameter.

Q6. The British Airways Internet site provides a questionnaire instrument that can be answered electronically. Which of the 4 methods of data collection is involved when people complete the questionnaire?

a. Published sources

b. Experimentation

c. Surveying

d. Observation

Q7. Which of the following is most likely a parameter as opposed to a statistic?

a. The average score of the first five students completing an assignment.

b. The proportion of females registered to vote in a county.

c. The average height of people randomly selected from a database.

d. The proportion of trucks stopped yesterday that were cited for bad brakes.

Q8. The chancellor of a major university was concerned about alcohol abuse on her campus and wanted to find out the proportion of students at her university who visited campus bars on the weekend before the final exam week. Her advisor took a random sample of 250 students. The total number of students in the sample who visited campus bars on the weekend before the final exam week is an example of

a. a categorical random variable.

b. a discrete random variable.

c. a continuous random variable.

d. a parameter.

Q9. The _____ applies when the majority of items in a set of data occur in a small number of categories, and the few remaining observations are spread out over many categories.

a. sampling error correction

b. biased observation problem

c. asymmetric distribution factor

d. Pareto principle

Q10. An insurance company evaluates many numerical variables about a person before deciding on an appropriate rate for automobile insurance. A representative from a local insurance agency selected a random sample of insured drivers and recorded the number of claims each made in the last 3 years.

# of claims # of drivers

1 14

2 18

3 12

4 5

5 1

Referring to the table, how many drivers are represented in the sample?

a. 5

b. 15

c. 18

d. 50

Q11. A type of vertical bar chart in which the categories are plotted in the descending rank order of the magnitude of their frequencies is called a

a. contingency table.

b. Pareto diagram.

c. dot plot.

d. pie chart.

Q12. When studying the simultaneous responses to two categorical variables, we should set up a

a. contingency table.

b. frequency distribution table.

c. cumulative percentage distribution table.

d. histogram.

Q13. Retailers are always interested in determining why a customer selected their store to make a purchase. A sporting goods retailer conducted a customer survey to determine why its customers shopped at the store. The results are shown in the bar chart below. What proportion of the customers responded that they shopped at the store because of the merchandise or the convenience?

a. 35%

b. 50%

c. 65%

d. 85%

Q14. When you want to present information about the percentage of values that are less than a certain value, use a(n):

a. relative frequency distribution

b. cumulative distribution

c. pie chart

d. histogram

Q15. To the student patterns in the value of variables over time, you would use a(n):

a. side-by-side bar chart

b. histogram

c. scatter diagram

d. time-series plot

Q16. When constructing charts, the following is plotted at the class midpoints:

a. frequency histograms.

b. percentage polygons.

c. cumulative relative frequency o gives.

d. All of the above.

Q17. In right-skewed distributions, which of the following is the correct statement?

a. The distance from Q1 to Q2 is larger than the distance from Q2 to Q3.

b. The distance from Q1 to Q2 is smaller than the distance from Q2 to Q3.

c. The arithmetic mean is smaller than the median.

d. The mode is larger than the arithmetic mean.

Q18. Health care issues are receiving much attention in both academic and political arenas. A sociologist recently conducted a survey of citizens over 60 years of age whose net worth is too high to qualify for Medicaid and have no private health insurance. The ages of 25 uninsured senior citizens were as follows:

60, 61, 62, 63, 64, 65, 66, 68, 68, 69, 70, 73, 73, 74, 75, 76, 76, 81, 81, 82, 86, 87, 89, 90, 92

Identify the interquartile range of the ages of the uninsured senior citizens.

a. 17 years

b. 16 years

c. 14 years

d. 15 years

Q19. Which of the following is sensitive to extreme values?

a. The median.

b. The interquartile range.

c. The arithmetic mean.

d. The 1st quartile.

Q20. Health care issues are receiving much attention in both academic and political arenas. A sociologist recently conducted a survey of citizens over 60 years of age whose net worth is too high to qualify for Medicaid and have no private health insurance. The ages of 25 uninsured senior citizens were as follows:

60, 61, 62, 63, 64, 65, 66, 68, 68, 69, 70, 73, 73, 74, 75, 76, 76, 81, 81, 82, 86, 87, 89, 90, 92Ã‚Â

Calculate the standard deviation of the ages of the uninsured senior citizens correct to the nearest hundredth of a year.Ã‚Â

a. 10 years

b. 9.74 years

c. 8.4 years

d. 11 years

Q21. According to the empirical rule, if the data form a bell-shaped distribution, then about _____ percent of the observations will be within plus or minus 2 standard deviations from the mean.

a. 68

b. 97.5

c. 99.7

d. 95

Q22. According to the Chebyshev rule, at least 75% of all observations in any data set are contained within a distance of plus or minus how many standard deviations of the mean?

a. 1

b. 2

c. 3

d. 4

Q23. Health care issues are receiving much attention in both academic and political arenas. A sociologist recently conducted a survey of citizens over 60 years of age whose net worth is too high to qualify for Medicaid and have no private health insurance. The ages of 25 uninsured senior citizens were as follows:

60, 61, 62, 63, 64, 65, 66, 68, 68, 69, 70, 73, 73, 74, 75, 76, 76, 81, 81, 82, 86, 87, 89, 90, 92

Identify the median age of the uninsured senior citizens.

a. 63 years

b. 41 years

c. 58 years

d. 73 years

Q24. According to the empirical rule, if the data form a bell-shapedÃ‚Â distribution, then about _____ percent of the observations will be within plus or minusÃ‚Â 1 standard deviations from the mean.

a. 68

b. 97.5

c. 99.7

d. 95

Q25. In left-skewed distributions, which of the following is the correct statement?

a. The distance from Q1 to Q2 is smaller than the distance from Q2 to Q3.

b. The distance from the smallest observation to Q1 is larger than the distance from Q3 to the largest observation.

c. The distance from the smallest observation to Q2 is smaller than the distance from Q2 to the largest observation.

d. The distance from Q1 to Q3 is twice the distance from the Q1 to Q2.

STATISTICS SECTION 2

If two events are independent (for example,Ã‚Â being struck by lightening andÃ‚Â being sued for tax evasion), what is the probability that they both occur at the same time?

a. 0.

b. 0.50.

c. 1.00.

d. Cannot be determined from the information given.

Q2. If two events are mutually exclusive and collectively exhaustive, what is the probability that both occur at the same time?

a. 0.

b. 0.50.

c. 1.00.

d. Cannot be determined from the information given.

Q3. If two events are mutually exclusive and collectively exhaustive, what is the probability that one or the other occurs?

a. 0.

b. 0.50.

c. 1.00.

d. Cannot be determined from the information given.

Q4. A study was recently done that emphasized the problem we all face with drinking and driving. Four hundred accidents that occurred on a Saturday night were analyzed. Two items noted were the number of vehicles involved and whether alcohol played a role in the accident.

Did alcohol play a role 1 Vehicle Involved 2 Vehicles Involved 3 Vehicles Involved Totals

Yes 50 100 20 170

No 25 175 30 230

Totals 75 275 50 400

Referring to the TABLE, given that multiple vehicles were involved, what proportion of accidents involved alcohol?

a. 120/170 or 70.59%

b. 120/230 or 52.17%

c. 120/325 or 36.92%

d. 120/400 or 30%

Q5. The employees of a company were surveyed on questions regarding their educational background and marital status. Of the 600 employees, 400 had college degrees, 100 were single, and 60 were single college graduates. The probability that an employee of the company has a college degree is:

a. 0.10

b. 0.25

c. 0.67

d. 0.73

Q6. Simple probability is also called

a. marginal probability.

b. joint probability.

c. conditional probability.

d. Bayes’ theorem.

Q7. The probability that house sales will increase in the next 6 months is estimated to be 0.25. The probability that the interest rates on housing loans will go up in the same period is estimated to be 0.74. The probability that house sales or interest rates will go up during the next 6 months is estimated to be 0.89. The probability that both house sales and interest rates will increase during the next 6 months is:

a. 0.10

b. 0.185

c. 0.705

d. 0.90

Q8. A company has 2 machines that produce widgets. An older machine produces 23% defective widgets, while the new machine produces only 8% defective widgets. In addition, the new machine produces 3 times as many widgets as the older machine does. What is the probability that a randomly chosen widget produced by the company is defective?

a. 0.078

b. 0.1175

c. 0.156

d. 0.310

Q9. In a Poisson distribution, the mean and variance are equal.

a. true

b. false

Q10. Thirty-six (36) of the‚ 81 teachers at a local‚ school are certified in Cardio-Pulmonary Resuscitation (CPR). Given there are‚180 days of school and that the teachers take turns on bus duty, about how many days can we expect that the teacher on bus duty‚ will be certified in CPR?

a. 36 days

b. 45 days

c. 72‚ days

d. 80 days

Q11. Whenever‚ p‚ = 0.5, the binomial distribution will

a. always be symmetric.

b. be symmetric only if‚ n‚ is large.

c. be right-skewed.

d. be left-skewed.

Q12. The local police department must write an average of‚ 5 traffic tickets‚ each day to keep department revenues at budgeted levels. Suppose the number of tickets written per day follows a Poisson distribution with a mean of 6.5 tickets per day. Interpret the value of the mean.

a. The number of tickets‚ written is 6.5‚ each day.

b. Half of the days have less than 6.5 tickets written and half of the days have more than 6.5 tickets written.

c. If we sampled all days, the expected number of tickets written would be 6.5 tickets per day.

d. The mean‚ cannot be‚ interpreted since you can write 0.5 tickets.

Q13. Suppose that the number of airplanes arriving at an airport per minute is a Poisson process. The average number of airplanes arriving per minute is 3. The probability that exactly 6 planes arrive in the next minute is approximately 0.0504 assuming e=2.71828.

a. true

b. false

Q14. In a Poisson distribution, the mean and standard deviation are equal.

a. true

b. false

Q15. The number of customers arriving at a department store in a 5-minute period has a Poisson distribution.

a. true

b. false

Q16. The Poisson distribution can be used to model a continuous random variable.

a. true

b. false

Q17. For some positive value ofÃ‚Â Z, the probability that a standard normal variable is between 0 andÃ‚Â ZÃ‚Â is 0.3340. The value ofÃ‚Â ZÃ‚Â is

a. 0.07

b. 0.37

c. 0.97

d. 1.06

Q18. Any set of normally distributed data can be transformed to its standardized form.

a. true

b. false

Q19. A company that sells annuities must base the annual payout on the probability distribution of the length of life of the participants in the plan. Suppose the probability distribution of the lifetimes of the participants is approximately a normal distribution with a mean of 68 years and a standard deviation of 3.5 years. What proportion of the plan recipients would receive payments beyond age 75?

a. .0034

b. 0.2134

c. 1.2543

d. 0.0228

Q20. Theoretically, the mean, median, and the mode are all equal for a normal distribution.

a. true

b. false

Q21. If a data batch is approximately normally distributed, its normal probability plot would be S-shaped.

a. true

b. false

Q22. Given that‚X‚is a normally distributed random variable with a mean of 50 and a standard deviation of 2, find the probability that‚X‚ is between 47 and 54.

a. 1.246

b. 0.9104

c. 0.5846

d. 0.1564

Q23. A worker earns $15 per hour at a plant and is told that only 2.5% of all workers make a higher wage. If the wage is assumed to be normally distributed and the standard deviation of wage rates is $5 per hour, the average wage for the plant is $7.50 per hour.

a. true

b. false

Q24. The owner of a fish market determined that the average weight for a catfish is 3.2 pounds with a standard deviation of 0.8 pound. Assuming the weights of catfish are normally distributed, the probability that a randomly selected catfish will weigh less than 2.2 pounds is :

a. 0.1253

b. 0.1056

c. 0.0124

d. 0.2145

Q25. The owner of a fish market determined that the average weight for a catfish is 3.2 pounds with a standard deviation of 0.8 pound. Assuming the weights of catfish are normally distributed, 89.80% of the catfish will weight above _____ pounds?

a. 2.124 pounds

b. 1.124 pounds

c. 3.124 pounds

d. 2.184 pounds

STATISTICS SECTION 3

As the sample size increases, the standard error of the mean increases.

a. true

b. false

Q2. The average score of all pro golfers for a particular course has a mean of 70 and a standard deviation of 3.0. Suppose 36 golfers played the course today. Find the probability that the average score of the 36 golfers exceeded 71.

a. 0.0228

b. 0.0124

c. 0.2135

d. 0.1248

Q3. For sample size 1, the sampling distribution of the mean will be normally distributed

a. regardless of the shape of the population.

b. only if the shape of the population is symmetrical.

c. only if the population values are positive.

d. only if the population is normally distributed.

Q4. The Central Limit Theorem is important in statistics because

a. for a largeÃ‚Â n, it says the population is approximately normal.

b. for any population, it says the sampling distribution of the sample mean is approximately normal, regardless of the sample size.

c. for a largeÃ‚Â n, it says the sampling distribution of the mean is approximately normally distributed, regardless of the shape of the population distribution.

d. for any sized sample, it says the sampling distribution of the sample mean is approximately normal.

Q5. The owner of a fish market has an assistant who has determined that the weights of catfish are normally distributed, with mean of 3.2 pounds and standard deviation of 0.8 pound. If a sample of 25 fish yields a mean of 3.6 pounds, what is the‚ Z‚value for this observation?

a. 18.750

b. 2.500

c. 1.875

d. 0.750

Q6. The owner of a fish market has an assistant who has determined that the weights of catfish are normally distributed, with mean of 3.2 pounds and standard deviation of 0.8 pound. If a sample of 64 fish yields a mean of 3.4 pounds, what is the probability of obtaining a sample mean this large or larger?

a. 0.0001

b. 0.0013

c. 0.0228

d. 0.4987

Q7. When sample sizes are at least 30, the sampling distribution of the mean is approximately normal,

a. regardless of the shape of the population.

b. only if the shape of the population is symmetrical.

c. only if the standard deviation of the samples are known.

d. only if the population is normally distributed.

Q8. If the amount of gasoline purchased per car at a large service station has a population mean of $15 and a population standard deviation of $4 and a random sample of 64 cars is selected, there is approximately a 95.44% chance that the sample mean will be between $14 and $16.

a. true

b. false

Q9. In the construction of confidence intervals, if all other quantities are unchanged, an increase in the sample size will lead to a _____ interval.

a. narrower

b. wider

c. less significant

d. biased

Q10. A confidence interval was used to estimate the proportion of statistics students that are females. A random sample of 72 statistics students generated the following 90% confidence interval: (0.438, 0.642). Based on the interval above, is the population proportion of females equal to 0.60?

a. No, and we are 90% sure of it.

b. No. The proportion is 54.17%.

c. Maybe. 0.60 is a believable value of the population proportion based on the information above.

d. Yes, and we are 90% sure of it.

Q11. A major department store chain is interested in estimating the average amount its credit card customers spent on their first visit to a new store. Fifteen credit card accounts were randomly sampled and analyzed with the following results: sample mean=$50.50 and sample variance=121. Construct a 95% confidence interval for the average amount its credit card customers spent on theirvisit to the chain’s new store in the mall assuming that the amount spent follows a normal distribution (that is, the sample variance equals the population variance).

a. $50.50 ‚± 1.96*121

b. $50.50 ‚Â± 1.96*(sqrt(121))

c. $50.50 ‚± 1.96/(sqrt(121))

d. $50.50 ‚± 1.96*(sqrt(121))/(sqrt(15))

Q12. Charities rely on money contributed by individuals and corporations for their operating expenses. Sometimes this money is put into a fund called an endowment, and the charity spends only the interest earned on these funds. A survey of 8 charities revealed the following endowments (in millions of dollars): 60.2, 47.0, 235.1, 490.0, 122.6, 177.5, 95.4, and 220.0. What value should you use as the point estimate for the mean endowment?

a. $148

b. $181

c. $143

d. $180

Q13. A community college administrators would like to know how many credit hours on average, each student takes per quarter. A random sample of 250 students yields a mean of 14.1 credit hours per quarter with a standard deviation of 2.3 credit hours per quarter. Estimate the mean to within 0.1 hours at 95% reliability and assume the sample standard deviation provides a good estimate for the population standard deviation. How large a sample do they need?

a.n = 2033

b.n = 2355

c.n= 3543

d.n= 4572

Q14. A race car driver tested his car for time from 0 to 60 mph, and in 20 tests obtained an average of 4.85 seconds with a standard deviation of 1.47 seconds. A 95% confidence interval for the 0 to 60 time is 4.52 seconds to 5.18 seconds.

a. true

b. false

Q15. The width of a confidence interval estimate for a proportion will be

a. narrower for 99% confidence than for 95% confidence.

b. wider for a sample size of 100 than for a sample size of 50.

c. narrower for 90% confidence than for 95% confidence.

d. narrower when the sample proportion is 0.50 than when the sample proportion is 0.20.

Q16. If you were constructing a 99% confidence interval of the population mean based on a sample ofÃ‚Â n=25 where the standard deviation of the sample standard deviation=0.05, the critical value ofÃ‚Â tÃ‚Â will be

a. 2.7969

b. 2.7874

c. 2.4922

d. 2.4851

Q17. The value that separates a rejection region from a non-rejection region is called the _______.

a. significance level

b. critical value

c. test statistic

d. parameter

Q18. A survey claims that 9 out of 10 doctors recommend aspirin for their patients with headaches. To test this claim against the alternative that the actual proportion of doctors who recommend aspirin is less than 0.90, a random sample of 100 doctors results in 83 who indicate that they recommend aspirin. The value of the test statistic in this problem is approximately equal to:

a. – 4.12

b. – 2.33

c. – 1.86

d. – 0.07

Q19. An entrepreneur is considering the purchase of a coin-operated laundry. The present owner claims that over the past 5 years, the average daily revenue was $675 with a standard deviation of $75. A sample of 30 days reveals a daily average revenue of $625. If you were to test the null hypothesis that the daily average revenue was $675, which test would you use?

a.Z-test of a population mean

b.Z-test of a population proportion

c. t-test of population mean

d. chi-squared test of population variance

Q20. A Type II error is committed when

a. we reject a null hypothesis that is true.

b. we don’t reject a null hypothesis that is true.

c. we reject a null hypothesis that is false.

d. we do not reject a null hypothesis that is false.

Q21. We have created a 95% confidence interval for Ã‚Âµ (mu) with the result (10, 15). What decision will we make if we test H0: Ã‚Âµ = 16 versus H1: Ã‚Âµ != 16, at alpha ÃŽÂ± = .05? (Note: “!=” means “not equal”)

a. Reject H0

b. Accept H0

c. Fail to reject H0

d. Cannot tell what the decision ought to be from the information given.

Q22. Which of the following would be an appropriate alternative hypothesis?

a. The mean of a population is equal to 55.

b. The mean of a sample is equal to 55.

c. The mean of a population is greater than 55.

d. The mean of a sample is greater than or equal to 55.

Q23. Researchers determined that 60 tissues is the average number of tissues used during a cold. Suppose a random sample of 100 Kleenex users yielded the following data on the number of tissues used during a cold: sample mean = 52, standard deviation = 22. Give the null and alternative hypotheses to determine if the number of tissues used during a cold is less than 60. (Note that Xbar is the sample mean.)

a. H0: Ã‚Âµ > 60; H1: Ã‚Âµ <= 60

b. H0: Ã‚Âµ >= 60; H1: Ã‚Âµ < 60

c. H0: Xbar > 60; H1: Xbar <= 60

d. H0: Xbar < 60; H1: Xbar >= 60‚

Q24. A Type I error is committed when

a. we reject a null hypothesis that is true.

b. we don’t reject a null hypothesis that is true.

c. we reject a null hypothesis that is false.

d. we do not reject a null hypothesis that is false.

Q25. If, as a result of a hypothesis test, we reject the null hypothesis when it is false, then we have committed

a. a Type II error.

b. a Type I error.

c. no error.

d. an acceptance error.

STATISTICS SECTION 4

In testing for the differences between the means of two related populations, the _______ hypothesis is the hypothesis of “no differences.”

a. null

b. sample

c. experiment

d. first

Q2. The use of preservatives by food processors has become a controversial issue. Suppose 2 preservatives are extensively tested and determined safe for use in meats. A processor wants to compare the preservatives for their effects on retarding spoilage. Suppose 15 cuts of fresh meat are treated with preservative A and 15 are treated with preservative B, and the number of hours until spoilage begins is recorded for each of the 30 cuts of meat. Referring to the Table below, state the F-test statistic for determining if the population variances differ for preservatives A and B.

Perservative A Perservative B

XbarA‚ = 106.4 hours XbarB‚= 96.54 hours

SA‚ = 10.3 hours SB‚= 13.4 hours

a. F = – 3.10

b. F = 0.5908

c. F = 0.7687

d. F = 0.8250

Q3. A supermarket is interested in finding out wheather the mean weekly sales volume of Coca-Cola are the same when the softdrinks are displayed on the top shelf and when they are displayed on the bottom shelf. 10 stores are randomly selected from the supermaket chain with 5 stores using the top shelf display and 5 stores using the bottom shelf display. Assume that the samples are normally distributed with equal population variances. Refere to the sales volume data in the table below, Top shelf Sales Mean=41.6, Variance=249.84, Bottom shelf sales Mean=62.2, Variance=66.96.

What is the sample pooled variance Sp2?

Top Shelf Sales Volume 23 35 50 68 32

Bottom Shelf Sales Volume 55 70 72 51 63

a. 158.4

b. 11.995

c. 0

d. -11.995

Q4. In testing for the differences between the means of two independent populations, we assume that the 2 populations each follow a _______ distribution.

a. sample

b. normal

c. odd

d. experiment

Q5. Given the following information, calculate the degrees of freedom that should be used in the pooled-varianceÃ‚Â ttest:‚

s12‚ = 4 and‚n1‚= 16‚

s22‚ = 6 and‚n2‚ = 25‚

a.‚ df‚= 41

b.‚ df‚= 39

c.‚df‚= 16

d.df‚ = 25

Q6. A supermarket is interested in finding out whether the mean weekly sales volume of Coca-Cola are the same when the soft drinks are displayed on the top shelf and when they are displayed on the bottom shelf. 10 stores are randomly selected from the supermarket chain with 5 stores using the top shelf display and 5 stores using the bottom shelf display. Assume that the samples are normally distributed with equal population variances. Refer to the sales volume data in the table below, Top shelf Sales Mean=41.6, Variance=249.84, Bottom shelf sales Mean=62.2, Variance=66.96.

What is the t-test statistic?

Top Shelf Sales Volume 23 35 50 68 32

Bottom Shelf Sales Volume 55 70 72 51 63

a. -2.588

b. -9.405

c. 9.405

d. 2.13

Q7. Given the following information, calculate‚ sp2, the pooled sample variance that should be used in the pooled-variance‚ t‚ test:‚

s12‚= 4 and‚ n1‚= 16‚

s22‚ = 6 and‚ n2= 25‚

a.sp2 = 6

b.sp2 = 5

c.sp2 = 5.23

d.sp2 = 4

Q8. A supermarket is interested in finding out whether the mean weekly sales volume of Coca-Cola are the same when the soft drinks are displayed on the top shelf and when they are displayed on the bottom shelf. Ten stores are randomly selected from the supermarket chain with 5 stores using the top shelf display and 5 stores using the bottom shelf display. Assume that the samples are normally distributed with equal population variances. Refer to the sales volume data in the table below, What are the critical values using a level of significance alpha=.01?

Top Shelf Sales Volume 23 35 50 68 32

Bottom Shelf Sales Volume 55 70 72 51 63

a. +2.7638 and -2.7638

b. +2.8965 and -2.8965

c. +3.3554 and -3.3554

d. +4.5407 and -4.5407

Q9. The objective of Analysis of Variance (ANOVA) is to analyze differences among the group means.

a. true

b. false

Q10. A supermarket is interested in finding out whether the mean weekly sales volume of Coca-Cola are the same when the soft drinks are displayed on the top shelf and when they are displayed on the bottom shelf. Ten stores are randomly selected from the supermarket chain with 5 stores using the top shelf display and 5 stores using the bottom shelf display. Assume that the samples are normally distributed with equal population variances. Refer to the sales volume data in the table below, what is the number of degree of freedom?

Top Shelf Sales Volume 23 35 50 68 32

Bottom Shelf Sales Volume 55 70 72 51 63

a. 8‚

b. 3

c. 10

d. 12

Q11. In testing for the differences between the means of two related populations, we assume that the differences follow a _______ distribution.

a. normal

b. odd

c. sample

d. population

Q12.

If we are testing for the difference between the means of two (2) independent populations with samples‚ n1‚ = 20 and‚ n2‚ = 20, the number of degrees of freedom is equal to

a. 39.

b. 38.

c. 19.

d. 18.

Q13.

If we are testing for the difference between the means of two (2) related populations with samples of‚ n1‚= 20 andn2‚= 20, the number of degrees of freedom is equal to

a. 39.

b. 38.

c. 19.

d. 18.

Q14. As the number of degrees of freedom increases, the chi-square distribution becomes

a. progressively more symmetrical

b. progressively more right-skewed

c. progressively more left-skewed

d. The shape is not affected by the degrees of freedom.

Q15. A test for whether one proportion is higher than the other can be performed using the chi-square distribution.

a. true

b. false

Q16. In testing a hypothesis using the chi-squared test, theÃ‚Â expected frequencies are based on the

a. assumption the null hypothesis is true: the proportion of successes in the two populations are equal.b. the null hypothesis is false: the proportion of successes in the two populations are not equal.

c. normal distribution.

d. None of the above.

Q17. A study published in the American Journal of Public Health was conducted to determine whether the use of seat belts in motor vehicles depends on ethnic status in San Diego County. A sample of 792 children treated for injuries sustained from motor vehicle accidents was obtained, and each child was classified according to (1) ethnic status (Hispanic or non-Hispanic) and (2) seat belt usage (worn or not worn) during the accident. Referring to the Table below, the calculated chi square test statistic is

Hispanic Non-Hispanic

Seat belts worn 31 148

Seat belts not worn 283 330

a. -0.9991

b. -0.1368

c. 48.1849

d. 72.8063

Q18. If we wish to determine whether there is evidence that the proportion of successes is the same in group 1 as in group 2, the appropriate test to use is

a. the‚ Z‚test.

b. the chi-square test.

c. Both of the above.

d. None of the above.

Q19. When using the chi-square test for independence, one should be aware that expected frequencies that are too small will lead to too big a Type I error.

a. true

b. false

Q20. A study published in the American Journal of Public Health was conducted to determine whether the use of seat belts in motor vehicles depends on ethnic status in San Diego County. A sample of 792 children treated for injuries sustained from motor vehicle accidents was obtained, and each child was classified according to (1) ethnic status (Hispanic or non-Hispanic) and (2) seat belt usage (worn or not worn) during the accident. Referring to the Table below, at 5% level of significance, the critical value of the test statistic is

Hispanic Non-Hispanic

Seat belts worn 31 148

Seat belts not worn 283 330

a. 3.8415

b. 5.9914

c. 9.4877

d. 13.2767

Q21. If we use the chi-square method of analysis to test for the difference between proportions, we must assume that there are at least 5 observed frequencies in each cell of the contingency table.

a. true

b. false

Q22. In testing the difference between two proportions using the normal distribution, we may use either a one-tailed Chi-square test or two-tailed‚ Z‚test.

a. true

b. false

Q23. A study published in the American Journal of Public Health was conducted to determine whether the use of seat belts in motor vehicles depends on ethnic status in San Diego County. A sample of 792 children treated for injuries sustained from motor vehicle accidents was obtained, and each child was classified according to (1) ethnic status (Hispanic or non-Hispanic) and (2) seat belt usage (worn or not worn) during the accident. Referring to the Table below, which test would be used to properly analyze the data in this experiment?

Hispanic Non-Hispanic

Seat belts worn 31 148

Seat belts not worn 283 330

a. chi-square test for independence

b. chi-square test for differences between two proportions (independent samples)

c. chi-square test for differences between two proportions (related samples)

d. chi-square test for differences among more than two proportions

Q24. The Marascuilo procedures allows one to make comparisons between all pairs of group to figure out which of the population proportions differ.

a. true

b. false

Q25. One criterion used to evaluate employees in the assembly section of a large factory is the number of defective pieces per 1,000 parts produced. The quality control department wants to find out whether there is a relationship between years of experience and defect rate. A defect rate in terms of High, Average or Low is calculated for each worker in a yearly evaluation. The results for 100 workers based on years of experiences are given in the table below.

Referring to the Table below, at alpha =0.05 level of significance, what would be the decision rule?

<1 Year <1-4 Year <5-9 Year

High 6 9 9

Average 9 19 23

Low 7 8 10

a. Reject H0‚ if chi-square > 16.919

b. Reject H0‚ if chi-square > 15.507

c. Reject H0‚ if chi-square > 11.143

d. Reject H0‚if chi-square > 9.488

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