Chapter 1 1-1
Statistics for Business and Economics, 6/e © 2007 Pearson Education, Inc.
Chapter 1
Why Study Statistics?
Statistics for
Business and Economics
Program For The First Semester
Chap 1-2Qafqaz University F. N. Aliyev 2012
№ Dərslərin mövzuları
Saatların
miqdarı
Qeyd
Mühazirə
Məşğələ
Labora
tor
iya
1 Introduction 1
2 Introduction 1
3 Problem solving 1
4 Tables and Charts, Inferential statistics 1
5 Tables and Charts, Inferential statistics 1
6 Problem solving 1
7 Measures of Central Tendency 1
8 Measures of Central Tendency 1
9 Problem solving 1
10 Probability Distributions 1
11 Probability Distributions 1
12 Problem solving 1
13 Binomial Distribution 1
14 Binomial Distribution 1
15 Problem solving 1
16 Normal Distribution 1
17 Normal Distribution 1
18 Problem solving 1
19 Normal Distribution 1
20 Normal Distribution 1
21 Problem solving 1
22 Central Limit Theorem 1
23 Central Limit Theorem 1
№ Dərslərin mövzuları
Saatların
miqdarı
Qeyd
Mühazirə
Məşğələ
Labora
tori
ya
24 Problem solving 1
25 Central Limit Theorem 1
26 Central Limit Theorem 1
27 Problem solving 1
28 Sampling Distributions 1
29 Sampling Distributions 1
30 Problem solving 1
31 Sampling Distributions 1
32 Sampling Distributions 1
33 Problem solving 1
34 Confidence Interval Estimation 1
35 Confidence Interval Estimation 1
36 Problem solving 1
37 Confidence Interval Estimation 1
38 Confidence Interval Estimation 1
39 Problem solving 1
40 Hypothesis Testing 1
41 Hypothesis Testing 1
42 Problem solving 1
43 Hypothesis Testing 1
44 Hypothesis Testing 1
45 Problem solving 1
Qafqaz University F. N. Aliyev 2012 Chap 1-3
İmtahanlardan Keçmə Qaydası
1. Məcburi semestr daxili fəaliyyət 100 bal 20%
2. Semestr daxili imtahan 100 bal 30 %
3. İstəyə bağlı semestr daxili fəaliyyət 100 bal 10%
4. Semestr sonu imtahan 100 bal 50 %
5. Kəsrlərin ləğvi imtahanı 100 bal 50 %
6. Əlavə imtahan 100 bal 100 %
Qafqaz University F. N. Aliyev 2012 Chap 1-4
Qafqaz University F. N. Aliyev 2012 Chap 1-5
Chapter Goals
After completing this chapter, you should be able to:
How statistics is used in business ?
The sources of data used in business
The types of data used in business
Explain key definitions:
Population vs. Sample
Parameter vs. Statistic
Descriptive vs. Inferential Statistics
Describe random sampling
Explain the difference between Descriptive and Inferential
statistics
What is Statistics?
“Statistics is a way to get information from data”
Data
Statistics
Information
Definitions: Oxford English Dictionary
Statistics is a tool for creating new understanding from a set
of numbers.
Chap 1-6Qafqaz University F. N. Aliyev 2012
Chapter 1 1-2
Statistics for Business and Economics, 6/e © 2007 Pearson Education, Inc.
Qafqaz University F. N. Aliyev 2012 Chap 1-7
Every day you use news and information sources to gather
the facts that you need to lead your life. You might listen to
a weather forecast to decide what clothes to wear, and if
you live in a large city, you might listen to a commuter report
to learn about the best route for traveling to your job or
school.
Your personal likes and dislikes shape some of your
decisions, too. In spite of hearing bad reviews of a motion
picture that suggest you skip seeing it, you might decide to
go anyhow just because you happen to like a particular
actor who appears in that film.
Likewise, every day business managers have to make
decisions. Although managers sometimes resort to "gut
instincts" to make some decisions (this is more formally
known as unstructured decision making), they more typically
make decisions that are directly influenced by hard facts.
Qafqaz University F. N. Aliyev 2012 Chap 1-8
As a business student, you cannot really learn how
to make decisions, as such decisions require
instincts and insights that require years of
experience to form. You can learn, though, the
procedures and methods that will help you make
better decisions that are based on hard facts. When
you begin focusing on the procedures and methods
involved in the collecting, presenting, and
summarizing of a set of data, or forming conclusions
about that data, you have discovered statistics.
Qafqaz University F. N. Aliyev 2012 Chap 1-9
In the Good Tunes scenario, you should proceed
with the reasonable assumption that the bankers
seek to make a decision based on the hard facts you
help present, and not on other factors, such as
whims or personal likes or dislikes. Presenting the
wrong information or the correct information in the
wrong fashion could lead the bankers to make a bad
business decision, which could jeopardize the future
of Good Tunes. You need to know something about
statistics to provide the hard facts that are
necessary, and to know something about statistics,
you first need to know the basic concepts of
statistics.
Qafqaz University F. N. Aliyev 2012 Chap 1-10
1.1 BASIC CONCEPTS OF STATISTICS
Statistics is the branch of mathematics that
examines ways to process and analyze data.
Statistics provides procedures to collect and
transform data in ways that are useful to business
decision-makers. To understand anything about
statistics, you need to first understand the definition
of a variable.
Examples of variables are your gender, your major
field of study, the amount of money you have in your
wallet, and the amount of time it takes you to get
ready to go to school in the morning. The key aspect
of the word variable is the idea that items differ and
people differ.
Qafqaz University F. N. Aliyev 2012 Chap 1-11
The person next to you may be male rather than
female, may be majoring in a different field of
study than you, almost certainly has a different
amount of money in his or her wallet, and
undoubtedly takes a different amount of time to get
ready in the morning than you do. You should
distinguish between a variable, such as gender,
and its value for an individual observation (e.g.,
"male").
Now that variables have been defined, you need to
understand the meaning of population, sample,
parameter, and statistic.
Qafqaz University F. N. Aliyev 2012 Chap 1-12
Chapter 1 1-3
Statistics for Business and Economics, 6/e © 2007 Pearson Education, Inc.
POPULATION
A population consists of all of the members of a
group about which you want to draw a conclusion.
SAMPLE
A sample is the portion of the population selected
for analysis.
PARAMETER
A parameter is a numerical measure that describes
a characteristic of population.
STATISTIC
A statistic is a numerical measure that describes a
characteristics of a sample.
Qafqaz University F. N. Aliyev 2012 Chap 1-13
Examples of populations are all the full-time
students at a college, all the voters in New York,
and all the people who went shopping at the local
mall this weekend. Samples could be selected
from each of the three populations mentioned
above. Examples include 10 full-time students
selected for a focus group, 500 voters in New
York, and 30 mall shoppers who were asked to
complete a customer satisfaction survey. In each
case, the people in the sample represent a
portion or subset of the people comprising the
population.
Qafqaz University F. N. Aliyev 2012 Chap 1-14
The average amount spent by all the people who
went shopping at the local mall this weekend is a
parameter. Information from all the shoppers in the
entire population is needed to compute this
parameter. The average amount spent by the 30
shoppers completing the customer satisfaction
survey is a statistic. Information from only 30
people who went to the local mall this weekend is
used in calculating the statistic.
Qafqaz University F. N. Aliyev 2012 Chap 1-15 Qafqaz University F. N. Aliyev 2012 Chap 1-16
Key Definitions
A population is the collection of all items of interest or
under investigation
N represents the population size
A sample is an observed subset of the population
n represents the sample size
A parameter is a specific characteristic of a population
A statistic is a specific characteristic of a sample
Qafqaz University F. N. Aliyev 2012 Chap 1-17
Population vs. Sample
a b c d
ef gh i jk l m n
o p q rs t u v w
x y z
Population Sample
b c
g i n
o r u
y
Values calculated using
population data are called
parameters
Values computed from
sample data are called
statistics
Qafqaz University F. N. Aliyev 2012 Chap 1-18
Examples of Populations
Names of all registered voters in the United
States
Incomes of all families living in Daytona Beach
Annual returns of all stocks traded on the New
York Stock Exchange
Grade point averages of all the students in your
university
Chapter 1 1-4
Statistics for Business and Economics, 6/e © 2007 Pearson Education, Inc.
THE PARTS OF STATİSTİCS
Statistics, itself, is divided into two branches,
both of which are applicable to managing
businesses. Descriptive statistics focuses on
collecting, summarizing, and presenting a set of
data. Inferential statistics uses sample data to
draw conclusions about a population.
Qafqaz University F. N. Aliyev 2012 Chap 1-19 Qafqaz University F. N. Aliyev 2012 Chap 1-20
Descriptive and Inferential Statistics
Two branches of statistics:
Descriptive statistics
Collecting, summarizing, and processing data to
transform data into information
Inferential statistics
provide the bases for predictions, forecasts, and
estimates that are used to transform information into
knowledge
Qafqaz University F. N. Aliyev 2012 Chap 1-21
Descriptive Statistics
Collect data
e.g., Survey
Present data
e.g., Tables and graphs
Summarize data
e.g., Sample mean =iX
n
Qafqaz University F. N. Aliyev 2012 Chap 1-22
Inferential Statistics
Estimation
e.g., Estimate the population
mean weight using the sample
mean weight
Hypothesis testing
e.g., Test the claim that the
population mean weight is 120
pounds
Inference is the process of drawing conclusions or making decisions about a population based on
sample results
Descriptive statistics has its roots in the recordkeeping
needs of large political and social organizations. For
example, every decade since 1790, the United States
has conducted a census that collects and summarizes
data about its citizens. Through the years, the U.S.
Census Bureau has been one of the many groups that
have refined the methods of descriptive statistics.
The foundation of inferential statistics is based on the
mathematics of probability theory. Inferential methods
use sample data to calculate statistics that provide
estimates of the characteristics of the entire
population.Qafqaz University F. N. Aliyev 2012 Chap 1-23
Where Start Statistics ? Today, applications of statistical methods can be
found in different areas of business. Accounting
uses statistical methods to select samples for
auditing purposes and to understand the cost drivers
in cost accounting. Finance uses statistical methods
to track trends in financial measures over time.
Management uses statistical methods to improve the
quality of the products manufactured or the services
delivered by an organization. Marketing uses
statistical methods to estimate the proportion of
customers who prefer one product over another and
why they do, and to draw conclusions about what
advertising strategy might be most useful in
increasing sales of a product.
Qafqaz University F. N. Aliyev 2012 Chap 1-24
Chapter 1 1-5
Statistics for Business and Economics, 6/e © 2007 Pearson Education, Inc.
THE GROWTH OF STATISTICS AND
INFORMATION TECHNOLOGY
During the past century, statistics has played an
important role in spurring the use of information
technology and, in turn, such technology has
spurred the wider use of statistics. Statisticians
such as Pearson, Fisher, Gosset, Neyman, Wald,
and Tukey established the techniques of modern
inferential statistics in response to the need to
analyze large sets of population data that had
become increasingly costly, time-consuming, and
cumbersome to collect.
Qafqaz University F. N. Aliyev 2012 Chap 1-25
For many years businesses have had access to
statistical packages, such as Minitab and SPSS,
that are standardized sets of programs that help
managers use a wide range of statistical techniques.
Whereas such packages were once available only in
corporate computing centers, the increasing power
and connectivity of personal computers have
brought the statistical power of these packages to
the desktop, where they have joined such familiar
tools as word processing, worksheet, and Web
browser programs.
Qafqaz University F. N. Aliyev 2012 Chap 1-27
The leasing and training costs associated with statistical
packages have led many to consider using some of the
graphical and statistical functions of Microsoft Excel.
However, you need to be aware of concerns that many
statisticians have about the accuracy and completeness of
the statistical results that Excel produces. Unfortunately,
some investigators have determined that certain Microsoft
Excel statistical capabilities contain flaws that can lead to
invalid results especially when the data sets used are very
large or have unusual statistical properties (see reference
3). Clearly, when you use Microsoft Excel, you must be
careful about the data and the analysis you are
undertaking. Whether this complication outweighs the
benefits of Excel' attractive features is still an unanswered
question in business today.
Qafqaz University F. N. Aliyev 2012 Chap 1-28
Because learning in context enhances
comprehension, each chapter begins with a "Using
Statistics" scenario, such as the "Good Tunes—
Part I" that identifies a business problem in which
statistics can be applied to change data into the
useful information required for a rational decision.
Questions raised in the scenarios lead to answers
in the form of statistical methods presented in
subsequent sections of the text. By thinking about
these questions, you will gain an appreciation of
how business managers are using statistics today
to solve problems and improve the quality of their
products and services.
Qafqaz University F. N. Aliyev 2012 Chap 1-29
For the "Good Tunes—Part I" scenario, selecting
what to present is just as important as selecting the
proper method for presentation and summarization.
In this case, presumably the bankers themselves
would demand some of the data, the "financials" of
the business. But what other data could you collect
and present that would help win the approval of the
loans? (See "Good Tunes—Part II" below.) Of
course, having presented your data, you would
hope that the bankers would make the right
inferences. That is, you would hope that the bankers
were knowledgeable about the appropriate
statistical methods that assist in the loan-making
decision!
Qafqaz University F. N. Aliyev 2012 Chap 1-30
USİNG OF STATİSTİCS
Good Tunes—Part II
The owners of Good Tunes have decided to
supplement the financial data in their loan
application with data concerning customer
perceptions about Good Tunes. To help assess
these perceptions, Good Tunes has been
asking its customers to complete and promptly
return a customer satisfaction survey that is
included in every order. The survey includes the
following questions:
Qafqaz University F. N. Aliyev 2012 Chap 1-31
Chapter 1 1-6
Statistics for Business and Economics, 6/e © 2007 Pearson Education, Inc.
Survey Provided by Good-Tunes
Qafqaz University F. N. Aliyev 2012 Chap 1-32
You have been asked to review the survey. What
type of data does the survey seek to collect?
What type of information can be generated from
the data of the completed survey? How can Good
Tunes use that information to improve the
perceived quality of the service and
merchandise? How can Good Tunes use that
information to increase its chance of getting a
loan approval? What other questions would you
suggest to include in the survey?
Qafqaz University F. N. Aliyev 2012 Chap 1-33
COLLECTING DATA
Managing a business effectively requires collecting
the appropriate data. In most instances, the data are
measurements acquired from items in a sample. The
samples are chosen from populations in such a
manner that the sample is as representative of the
population as possible. The most common technique
to ensure proper representation is to use a random
sample. (Chapter 7 for a detailed discussion of
sampling techniques.)
Many different types of circumstances require the
collection of data:
Qafqaz University F. N. Aliyev 2012 Chap 1-34
A marketing research analyst needs to assess the
effectiveness of a new television advertisement.
A pharmaceutical manufacturer needs to determine
whether a new drug is more effective than those
currently in use.
An operations manager wants to monitor a
manufacturing process to find out whether the quality
of a product is conforming to company standards.
An auditor wants to review the financial transactions of
a company in order to determine whether or not the
company is in compliance with generally accepted
accounting principles.
A potential investor wants to determine which firms
within which industries are likely to have accelerated
growth in a period of economic recovery.Qafqaz University F. N. Aliyev 2012 Chap 1-35
Identifying Sources of Data
Identifying the most appropriate source of data is a
critical aspect of statistical analysis. If biases,
ambiguities, or other types of errors flaw the data
being collected, even the most sophisticated
statistical methods will not produce accurate
information.
Four important sources of data are:
Data distributed by an organization or an individual
A designed experiment
A survey
An observational studyQafqaz University F. N. Aliyev 2012 Chap 1-36
Market research firms and trade associations also
distribute data pertaining to specific industries or
markets. Investment services such as Mergent's
provide financial data on a company-by-company
basis. Syndicated services such as A. C. Nielsen
provide clients with data enabling the comparison
of client products with those of their competitors.
Daily newspapers are filled with numerical
information regarding stock prices, weather
conditions, and sports statistics.
Qafqaz University F. N. Aliyev 2012 Chap 1-37
Chapter 1 1-7
Statistics for Business and Economics, 6/e © 2007 Pearson Education, Inc.
As listed above, conducting an experiment is another
important data collection source. For example, to test
the effectiveness of laundry detergent, an experimenter
determines which brands in the study are more effective
in cleaning soiled clothes by actually washing dirty
laundry instead of asking customers which brand they
believe to be more effective. Proper experimental
designs are usually the subject matter of more advanced
texts, because they often involve sophisticated statistical
procedures. However, some fundamental experimental
design concepts will be considered in Chapter 10.
Conducting a survey is a third important data source.
Here the people being surveyed are asked questions
about their beliefs, attitudes, behaviors, and other
characteristics. Responses are then edited, coded, and
tabulated for analysis.Qafqaz University F. N. Aliyev 2012 Chap 1-38
Conducting an observational study is the fourth
important data source. In such a study, a researcher
observes the behavior directly, usually in its natural
setting. Observational studies take many forms in
business. One example is the focus group, a market
research tool that is used for eliciting unstructured
responses to open-ended questions. In a focus group, a
moderator leads the discussion, and all the participants
respond to the questions asked. Other, more structured
types of studies involve group dynamics and consensus
building and use various organizational behavior tools
such as brainstorming, the Delphi technique, and the
nominal-group method. Observational study techniques
are also used in situations in which enhancing
teamwork, or improving the quality of products and
service are management goals.Qafqaz University F. N. Aliyev 2012 Chap 1-39
Data sources are classified as being either primary
sources or secondary sources. When the data collector
is the one using the data for analysis, the source is
primary. When one organization or individual has compiled
the data that are used by another organization or
individual, the source is secondary.
Organizations and individuals that collect and publish data
typically use that data as a primary source and then let
others use it as a secondary source. For example, the
United States federal government collects and distributes
data in this way for both public and private purposes. The
Bureau of Labor Statistics collects data on employment as
well as distributing the monthly Consumer Price Index. The
Census Bureau oversees a variety of ongoing surveys
regarding population, housing, and manufacturing and
undertakes special studies on topics such as crime, travel,
and health care.Qafqaz University F. N. Aliyev 2012 Chap 1-40
Statistic İnformation About
Azerbaijan
Azərbaycan Respublikası Dövlət Statistika
Komitəsi,
Azərbaycanın statistik göstəriciləri .
http://www.azstat.org/
Azərbaycan Respublikası Dövlət Statistika
Komitəsi,
Azərbaycanın regionları .
http://www.azstat.org.shtml
Qafqaz University F. N. Aliyev 2012 Chap 1-41
TYPES OF DATA
Data are the observed values of variables, for
example, the responses to a survey. Statisticians
develop surveys to deal with a variety of different
variables. As illustrated in figure, there are two types of
variables—categorical and numerical.
Qafqaz University F. N. Aliyev 2012 Chap 1-42
Categorical variables yield categorical responses,
such as yes or no answers. An example is the
response to the question "Do you currently own any
stocks or bonds?" because it is limited to a simple
yes or no answer. Another example is the response
to the question on the Good Tunes survey, "Are you
likely to buy additional merchandise through Good
Tunes in the next 12 months?" Categorical variables
can also yield more than two possible responses.
For example, "Which day of the week are you most
likely to eat dinner in a restaurant?”
Qafqaz University F. N. Aliyev 2012 Chap 1-43
Chapter 1 1-8
Statistics for Business and Economics, 6/e © 2007 Pearson Education, Inc.
Numerical variables yield numerical responses
such as your height in inches. Other examples are
how much money you expect to spend on stereo
equipment in the next 12 months (from the Good
Tunes customer satisfaction survey) or the response
to the question "To how many magazines do you
currently subscribe?" There are two types of
numerical variables: discrete and continuous.
Discrete variables produce numerical responses
that arise from a counting process. "The number of
magazines subscribed to" is an example of a
discrete numerical variable, because the response is
one of a finite number of integers. You subscribe to
zero, one, two, and so on, magazines.
Qafqaz University F. N. Aliyev 2012 Chap 1-44
Continuous variables produce numerical responses that
arise from a measuring process. Your height is an example
of a continuous numerical variable, because the response
takes on any value within a continuum or interval,
depending on the precision of the measuring instrument.
For example, your height may be 67 inches, 67.5 inches, or
67.53 inches, depending on the precision of the available
instruments.
No two persons are exactly the same height and the more
precise the measuring device used, the greater the
likelihood of detecting differences between their heights.
However, most measuring devices are not sophisticated
enough to detect small differences. Hence, tied
observations are often found in experimental or survey data
even though the variable is truly continuous, and
theoretically all values of a continuous variable are different.Qafqaz University F. N. Aliyev 2012 Chap 1-45
Qafqaz University F. N. Aliyev 2012 Chap 1-46
Types of Data
Data
Categorical Numerical
Discrete Continuous
Examples:
Marital Status
Are you registered to
vote?
Eye Color
(Defined categories or
groups)
Examples:
Number of Children
Defects per hour
(Counted items)
Examples:
Weight
Voltage
(Measured characteristics)
Qafqaz University F. N. Aliyev 2012 Chap 1-48
Random Sampling
Simple random sampling is a procedure in which
each member of the population is chosen strictly by chance,
each member of the population is equally likely to be chosen,
and
every possible sample of n objects is equally likely to be chosen
The resulting sample is called a random sample
Qafqaz University F. N. Aliyev 2012 Chap 1-49
The Decision Making Process
Begin Here:
Identify the
Problem
Data
Information
Knowledge
Decision
Descriptive Statistics,
Probability, Computers
Experience, Theory,
Literature, Inferential
Statistics, Computers
Chapter 1 1-9
Statistics for Business and Economics, 6/e © 2007 Pearson Education, Inc.
Qafqaz University F. N. Aliyev 2012 Chap 1-50
Chapter Summary
Introduced key definitions:
Population vs. Sample
Parameter vs. Statistic
Descriptive vs. Inferential statistics
Described random sampling
Examined the decision making process
CHAPTER REVIEW PROBLEMS
Qafqaz University F. N. Aliyev 2012 Chap 1-51
1.12 What is the difference between a sample and a
population?
1.13 What is the difference between a statistic and a
parameter?
1.14 What is the difference between descriptive and inferential
statistics?
1.15 What is the difference between a categorical and a
numerical variable?
1.16 What is the difference between a discrete and a continuous
variable?
1.17 What is an operational definition and why is it so
important?
Checking Your Understanding
Exercises and Questions
1.1 Three different beverages are sold at a fast-food
restaurant—soft drinks, tea, and coffee. Explain why
the type of beverage sold is an example of a
categorical variable.
1.2 Soft drinks are sold in three sizes in a fast-food
restaurant—small, medium, and large. Explain why
the size of the soft drink is a categorical variable.
Qafqaz University F. N. Aliyev 2012 Chap 1-52
ANSWER
1.2 Small, medium and large sizes are
categories.
Qafqaz University F. N. Aliyev 2012 Chap 1-53
Exercises and Questions
Qafqaz University F. N. Aliyev 2012 Chap 1-54
1.3 Suppose that you measure the time it takes to
download an MP3 file from the Internet.
a.Explain why the download time is a numerical
variable.
b.Is the variable discrete or continuous?
Exercises and Questions
(Applying the Concepts)
Qafqaz University F. N. Aliyev 2012 Chap 1-55
1.4 For each of the following variables, determine
whether the variable is categorical or numerical. If
the variable is numerical, determine whether the
variable is discrete or continuous.
a.Number of telephones per household
b.Length (in minutes) of the longest longdistance call
made per month
c.Whether there is a telephone line connected to a
computer modem in the household
d.Whether there is a fax machine in the household
Chapter 1 1-10
Statistics for Business and Economics, 6/e © 2007 Pearson Education, Inc.
ANSWER
1.4 (a) The number of telephones is a
numerical variable that is discrete because the
variable is counted, (b) The length of the
longest longdistance call is a numerical
variable that is continuous since any value
within a range of values can occur, (c) Whether
there is a telephone line connected to a
computer modem in the household is a
categorical variable because the answer can
only be yes or no. (d) Same answer as in (c).
Qafqaz University F. N. Aliyev 2012 Chap 1-56
Exercises and Questions
Qafqaz University F. N. Aliyev 2012 Chap 1-57
1.5 The following information is collected from
students upon exiting the campus bookstore during
the first week of classes:
a.Amount of time spent shopping in the bookstore
b.Number of textbooks purchased
c.Academic major
d.Gender
Classify each of these variables as categorical or
numerical. If the variable is numerical, determine
whether the variable is discrete or continuous.
Exercises and Questions
Qafqaz University F. N. Aliyev 2012 Chap 1-58
1.6 For each of the following variables, determine
whether the variable is categorical or numerical. If the
variable is numerical, determine whether the variable
is discrete or continuous.
a.Name of Internet provider
b.Amount of time spent surfing the Internet per week
c. Number of e-mails received in a week
d. Number of online purchases m.ade in a month
ANSWER
1.6 (a) categorical; (b) numerical, continuous;
(c) numerical, discrete; (d) numerical, discrete.
Qafqaz University F. N. Aliyev 2012 Chap 1-59
Exercises and Questions
Qafqaz University F. N. Aliyev 2012 Chap 1-60
1.7 For each of the following variables, determine
whether the variable is categorical or numerical. If the
variable is numerical, determine whether the variable
is discrete or continuous.
a.Amount of money spent on clothing in the last month
b.Favorite department store
c.Most likely time period during which shopping for
clothing takes place (weekday, weeknight, or
weekend)
d.Number of pairs of winter gloves owned
Exercises and Questions
Qafqaz University F. N. Aliyev 2012 Chap 1-61
1.8 Suppose the following information is collected
from Robert Keeler on his application for a home
mortgage loan at the Metro County Savings and
Loan Association:
a.Monthly Payments: $1,427
b.Number of Jobs in Past 10 Years: 1
c.Annual Family Salary Income: $86,000
d.Marital Status: Married
Classify each of the responses by type of data.
Chapter 1 1-11
Statistics for Business and Economics, 6/e © 2007 Pearson Education, Inc.
Answer
1.8 (a) numerical, continuous; (b) numerical,
discrete; (c) numerical, continuous; (d)
categorical.
Qafqaz University F. N. Aliyev 2012 Chap 1-62
Exercises and Questions
Qafqaz University F. N. Aliyev 2012 Chap 1-63
1.9 One of the variables most often included in surveys
is income. Sometimes the question is phrased "What
is your income (in thousands of dollars)?" In other
surveys, the respondent is asked to "Place an X in the
circle corresponding to your income level" and given a
number of ranges to choose from.
a. In the first format, explain why income might be
considered either discrete or continuous.
b.Which of these two formats would you prefer to use if
you were conducting a survey? Why?
c. Which of these two formats would likely bring you a
greater rate of response? Why?
Exercises and Questions
Qafqaz University F. N. Aliyev 2012 Chap 1-64
1.10 If two students score a 90 on the same
examination, what arguments could be used to
show that the underlying variable test score is
continuous?
Answer
1.10 The underlying variable, ability of the
students, may be continuous but the measuring
device, the test, does not have enough
precision to distinguish between the two
students.
Qafqaz University F. N. Aliyev 2012 Chap 1-65
Exercises and Questions
Qafqaz University F. N. Aliyev 2012 Chap 1-66
1.11 The director of market research at a large department
store chain wanted to conduct a survey throughout a
metropolitan area to determine the amount of time
working women spend shopping for clothing in a typical
month.
a. Describe both the population and the sample of
interest, and indicate the type of data the director
might wish to collect.
b. Develop a first draft of the questionnaire needed in
(a) by writing a series of three categorical questions
and three numerical questions that you feel would be
appropriate for this survey.
Exercises and Questions
(Applying the Concepts)
Qafqaz University F. N. Aliyev 2012 Chap 1-67
1.18 The Data and Story Library
lib.stat.cmu.edu/DASL is an online library of data
files and stories that illustrate the use of basic
statistical methods. The stories are classified by
method and by topic. Go to this site and click on List
all topics. Pick a story and summarize how statistics
are used in the story.
Chapter 1 1-12
Statistics for Business and Economics, 6/e © 2007 Pearson Education, Inc.
Exercises and Questions
Qafqaz University F. N. Aliyev 2012 Chap 1-68
1.19 Go to the official Microsoft Excel Web site
www.microsoft.com/office/excel. Explain how you
think Microsoft Excel could be useful in the field of
statistics.
1.20 Go to the official Minitab Web site
www.minitab.com. Explain how you think Minitab
could be useful in the field of statistics.
1.21 Go to the official SPSS Web site
www.spss.com. Explain how you think SPSS could
be useful in the field of statistics.
Exercises and Questions
Qafqaz University F. N. Aliyev 2012 Chap 1-69
1.22 The Gallup organization releases the results of
recent polls at its Web site www.gallup.com. Go to
this site and click on an article of interest to you in the
"Top Stories" section.
a.Give an example of a categorical variable found in
the article.
b.Give an example of a numerical variable found in
the article.
c. Is the variable you selected in (b) discrete or
continuous?
Exercises and Questions
Qafqaz University F. N. Aliyev 2012 Chap 1-70
1.23 The U.S. Census Bureau www.census.gov
site contains survey information on people, business,
geography, and other topics. Go to the site and click
on Housing in the "People" section. Then click on
American Housing Survey.
a. Briefly describe the American Housing Survey.
b. Give an example of a categorical variable found in this
survey.
c. Give an example of a numerical variable found in this
survey.
d. Is the variable you selected in (c) discrete or continuous?
Exercises and Questions
Qafqaz University F. N. Aliyev 2012 Chap 1-71
1.24 On the U.S. Census Bureau www.census.gov site,
click on Survey of Business Owners in the"Business"
section and read the description of The Survey of Business
Owners and Self-Employed Persons (SBO). Click on SBO-1
in the "Forms and Instructions" section to view the actual
survey form used.
a. Give an example of a categorical random variable found
in this survey.
b. Give an example of a numerical random variable found in
this survey.
c. Is the variable you selected in (b) discrete or continuous?
Exercises and Questions
Qafqaz University F. N. Aliyev 2012 Chap 1-72
1.25 In a report based on U.S. Transportation Department
statistics, the budget carrier JetBlue was number 1 in qual
ity among all U.S. airlines in 2003. JetBlue had the second
best on-time performance, arriving on time 86% of the
Introduction to the Web Cases 11 time. Also, Jet Blue
customers filed fewer complaints than all other airlines but
one ("JetBlue ranked No. 1 Airline, Report Says,"
USAToday.com, April 5, 2004).
a. Which of the four types of data sources listed in Section
1.4 on page 7 do you think were used in this study?
b. Name a categorical variable discussed in this article.
c. Name a numerical variable discussed in this article.
Qafqaz University F. N. Aliyev 2012 Chap 1-73
1.26 According to a Goldman Sachs survey, only about 4% of U.S.
households bank online. A survey by Cyber Dialogue investigated reasons
people quit online banking after trying it. A partial listing of the results of
the Cyber Dialogue survey are given below ("USA Snapshots," USA
Today, February 21, 2000, Al).
Why Did You Quit Online Banking?
Too complicated or time-consuming 27%
Unhappy with customer service 25%
No need/not interested 20%
Concerns about security or fraud 11%
Too costly 11%
Concerns about privacy 5%
a. Describe the population for the Goldman Sachs survey.
b. Describe the population for the Cyber Dialogue survey.
c. Is a response to the question "Why did you quit online
banking?" categorical or numerical?
d. Twenty-seven percent of respondents indicated that
online banking was too complicated or too time-con
suming. Is this a parameter or a statistic?
Chapter 1 1-13
Statistics for Business and Economics, 6/e © 2007 Pearson Education, Inc.
ANSWER
1.26 (a) all U.S. households; (b) all people who
have tried and quit online banking; (c)
categorical; (d) a statistic.
Qafqaz University F. N. Aliyev 2012 Chap 1-74
Exercises and Questions
Qafqaz University F. N. Aliyev 2012 Chap 1-75
1.27 A manufacturer of cat food was planning to survey households
in the United States to determine purchasing habits of cat owners.
Among the questions to be included are those that relate to
where cat food is primarily purchased.
whether dry or moist cat food is purchased.
the number of cats living in the household.
whether or not the cat is pedigreed.
a. Describe the population.
b. For each of the four items listed, indicate whether the
variable is categorical or numerical. If numerical, is it
discrete or continuous?
c. Develop five categorical questions for the survey.
d. Develop five numerical questions for the survey.
Exercises and Questions
1.5 The college surveyed its students to determine
average-weekly time spent surfing the Internet. From
a sample of 174 students the average time was
counted to be 6.1 hours.
a. What is the population?
b. What is the sample?
c. What is the statistic?
d. Is the value 6.1 hours a parameter or a
statistic?
Qafqaz University F. N. Aliyev 2012 Chap 1-76
Exercises and Questions
K 1.6 One airline claims that less than 1% of its
scheduled flights out of Orlando International
Airport depart late. From a random sample of
200 flights, 1.5% were found to depart later than
the scheduled time.
a. What is the population?
b. What is the sample?
c. What is the statistic?
d. Is 1.5% a parameter or a statistic?
Qafqaz University F. N. Aliyev 2012 Chap 1-77
ANSWER
1.6 a. The population consists of all of the
airline's scheduled flights at Orlando
International Airport.
b. The sample consists of the randomly
selected 200 flights.
c. The statistic is the 1.5% that were found to
depart later than the scheduled time for
the 200 randomly selected flights.
d. 1.5% is a sample statistic.
Qafqaz University F. N. Aliyev 2012 Chap 1-78
Exercises and Questions
1.7 Suppose that you own a grocery store.
a. Give an example of a question that could be
answered using descriptive statistics.
b. Give an example of a question where
estimating a parameter would be helpful.
c. Give an example of a question concerning a
possible relationship between two variables of
interest to your grocery business.
d. Give an example of a forecasting question.
Qafqaz University F. N. Aliyev 2012 Chap 1-79
Chapter 1 1-14
Statistics for Business and Economics, 6/e © 2007 Pearson Education, Inc.
Exercises and Questions
1.8 Determine if descriptive statistics or
inferential statistics should be used to obtain the
following information:
a. A graph that shows the number of defective
bottles produced during the day shift over one
week's time
b. An estimate of the percentage of employees
who arrive to work late
c. An indication of the relationship between
years of employee experience and pay scale
Qafqaz University F. N. Aliyev 2012 Chap 1-80
ANSWER
1.8 a. Descriptive—to describe information
about a one-week sample.
b. Inferential statistics—to estimate the true
percentage of all employees who arrive to
work late.
c. Inferential statistics—to predict the
relationship between years of experience and
pay scale.
Qafqaz University F. N. Aliyev 2012 Chap 1-81
1.9 A random sample of 100 university students was asked a
series of questions to obtain demographic data on their status
as an American or an international student, major, gender, age,
year in school, and current grade point average (GPA). Other
questions asked for their levels of satisfaction with campus
parking, campus housing, and campus dining. Responses to
these satisfaction questions were measured on a scale from 1
to 5 with 5 being the highest level of satisfaction. Finally, these
students were asked if they planned to attend graduate school
within 5 years of their college graduation (0: no; 1: yes). These
data are contained in the data file Finstad and Lie Study.
a. Give an example of how to apply descriptive statistics to
this data.
b. Give an example of an estimation question that
could be answered by inferential statistics.
c. Give an example of a possible relationship
between two variables.Qafqaz University F. N. Aliyev 2012 Chap 1-82
Exercises and Questions
K2.1 State whether each of the following
variables is categorical or numerical. If categorical,
give the level of measurement. If numerical, is it
discrete or continuous?
a. Number of e-mail messages sent daily by a
financial planner
b. Actual cost of a student's textbooks for a given
semester
c. Your monthly electricity bill
d. Faculty ranks (professor, associate professor,
assistant professor, instructor)Qafqaz University F. N. Aliyev 2012 Chap 1-83
Exercises and Questions
K2.2 The public relations office of a professional
basketball team wants information about fans that
attend postseason tournament games. A
questionnaire is given to each fan upon entrance to
the postseason game. Is the answer to each of the
following questions categorical or numerical? If
categorical, give the level of measurement. If
numerical, is it discrete or continuous?
a. Are you a season-ticket holder?
b. Do you live in Orange County?
c. What was the actual cost of your ticket to this
postseason game?Qafqaz University F. N. Aliyev 2012 Chap 1-84
ANSWER
2.2 a. Categorical data. The measurements
levels are qualitative—nominal, yes/no
response.
b. Categorical data. The measurement levels
are are qualitative—nominal.
c. Numerical data. Dollar amounts are
generally considered continuous, even though
we may truncate dollar amounts and treat dollar
amounts as if they were the same
as discrete.
Qafqaz University F. N. Aliyev 2012 Chap 1-85
Chapter 1 1-15
Statistics for Business and Economics, 6/e © 2007 Pearson Education, Inc.
K2.3 A questionnaire was distributed to students at
a liberal arts college to find out the level of student
satisfaction with various activities and services. For
example, concerning the "method of registration for
classes for the next semester," students were asked to
check one of the following boxes:
very satisfied
moderately satisfied
neutral
moderately dissatisfied
very dissatisfied
Is a student's response to this question numerical or
categorical? If numerical, is it discrete or continuous?
If categorical, give the level of measurement.Qafqaz University F. N. Aliyev 2012 Chap 1-86
Exercises and Questions
K2.4 Faculty at one university were asked a
series of questions in a recent survey. State the type
of data for each question.
a. Indicate your level of satisfaction with your
teaching load (very satisfied; moderately satisfied;
neutral; moderately dissatisfied; very dissatisfied).
b. How many articles did you have published in
refereed journals during the last year?
c. Did you attend the last university faculty meeting?
d. Do you think that the teaching evaluation
process needs to be revised?Qafqaz University F. N. Aliyev 2012 Chap 1-87
ANSWER
2.4
a. Categorical—Qualitative—ordinal
b. Numerical—Quantitative—discrete
c. Categorical—Qualitative—nominal
d. Categorical—Qualitative—nominal
Qafqaz University F. N. Aliyev 2012 Chap 1-88
Exercises and Questions
K2.5 A sample of customers in a specialty ice
cream store
was asked a series of questions. Identify the type of
data for each question.
a. What is your favorite flavor of ice cream?
b. How many times a month do you eat ice cream?
c. Do you have children under the age of 10 living
in your home?
d. Have you tried our latest specialty ice cream
flavor?Qafqaz University F. N. Aliyev 2012 Chap 1-89
K2.6 Residents in one housing development were
asked a series of questions by their homeowners'
association. Identify the type of data for each
question.
a. Did you play golf during the last month on the
development's new golf course?
b. How many times have you eaten at the country
club restaurant during the last three months?
c. Do you own a camper?
d. Rate the new security system for the develop
ment (very good, good, poor, very poor).Qafqaz University F. N. Aliyev 2012 Chap 1-90
Exercises and Questions ANSWER
2.6 a. Categorical—Qualitative—nominal
b. Numerical—Quantitative—discrete
c. Categorical—Qualitative—nominal; yes/no
response
d. Categorical—Qualitative—ordinal
Qafqaz University F. N. Aliyev 2012 Chap 1-91
Chapter 1 1-16
Statistics for Business and Economics, 6/e © 2007 Pearson Education, Inc.
Translation of Key Terms
categorical variables-kateqorik dəyişənlər
continuous variables-kəsilməz dəyişənlər
data-məlumat
descriptive statistics-təsviri statistika
discrete variables-diskret dəyişənlər
focus group-
inferential statistics-ümumiləşdirici statistika
numerical variables-ədədi dəyişənlər
operational definition-
parameter-parametrQafqaz University F. N. Aliyev 2012 Chap 1-92
population-populyasiya(ana müşahidə)
primary sources-əsas mənbələr
sample-nümunə(seçmə müşahidə)
secondary sources-ikinci mənbələr
statistic-statistika
statistics-statistika(elm mənasında)
statistical packages-statistik programlar
variables-dəyişənlər
Qafqaz University F. N. Aliyev 2012 Chap 1-93
Translation of Key Terms