Online Topics OLT-1
ONLINE TOPICS
CHAPTER 5: DISCRETE PROBABILITY DISTRIBUTIONS
Section 5.6 Online Topic: Using the Poisson Distribution to
Approximate the Binomial Distribution
1. True or False: You can use the Poisson distribution to approximate the binomial distribution
when the sample size is large and the probability of an event of interest is very small.
2. True or False: When you use the Poisson distribution to approximate the binomial distribution,
the number of events of interest can be larger than the sample size.
3. True or False: When you use the Poisson distribution to approximate the binomial distribution,
the mean is
n
where n is the sample size and
is the probability of an event of interest.
4. True or False: When you use the Poisson distribution to approximate the binomial distribution,
the standard deviation is
n
where n is the sample size and
is the probability of an event of
interest.
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5. Based on past experience, only 0.5% of the invoices of a company contain an error. Out of the
1,500 invoices that the company will issue, what is the approximate probability that zero invoices
will contain an error?
6. Based on past experience, only 0.5% of the invoices of a company contain an error. Out of the
1,500 invoices that the company will issue, what is the approximate probability that exactly 2
invoices will contain an error?
7. Based on past experience, only 0.5% of the invoices of a company contain an error. Out of the
1,500 invoices that the company will issue, what is the approximate probability that less than 4
invoices will contain an error?
8. Based on past experience, only 0.5% of the invoices of a company contain an error. Out of the
1,500 invoices that the company will issue, what is the approximate probability that no more than
4 invoices will contain an error?
9. Based on past experience, only 0.5% of the invoices of a company contain an error. Out of the
1,500 invoices that the company will issue, what is the approximate probability that at least 4
invoices will contain an error?
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10. Based on past experience, only 0.5% of the invoices of a company contain an error. Out of the
1,500 invoices that the company will issue, what is the approximate probability that more than 4
invoices will contain an error?
11. If a new machine of a production plant is functioning properly, only 1% of the items produced
will be defective. Out of the 1,000 items the plant produces on a single day, the approximate
probability that none of the items will be defective if the new machine is indeed functioning
properly is _____.
12. If a new machine of a production plant is functioning properly, only 1% of the items produced
will be defective. Out of the 1,000 items the plant produces on a single day, the approximate
probability that exactly 0.2% of the items will be defective if the new machine is indeed
functioning properly is _____.
13. If a new machine of a production plant is functioning properly, only 1% of the items produced
will be defective. Out of the 1,000 items the plant produces on a single day, the approximate
probability that no more than 0.2% of the items will be defective if the new machine is indeed
functioning properly is _____.
14. If a new machine of a production plant is functioning properly, only 1% of the items produced
will be defective. Out of the 1,000 items the plant produces on a single day, the approximate
probability that less than 0.2% of the items will be defective if the new machine is indeed
functioning properly is _____.
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15. If a new machine of a production plant is functioning properly, only 1% of the items produced
will be defective. Out of the 1,000 items the plant produces on a single day, the approximate
probability that at least 0.2% of the items will be defective if the new machine is indeed
functioning properly is _____.
16. If a new machine of a production plant is functioning properly, only 1% of the items produced
will be defective. Out of the 1,000 items the plant produces on a single day, the approximate
probability that more than 0.2% of the items will be defective if the new machine is indeed
functioning properly is _____.
Online Topics OLT-5
CHAPTER 6: THE NORMAL DISTRIBUTION AND OTHER
CONTINUOUS DISTRIBUTIONS
Section 6.6 Online Topic: The Normal Approximation to the
Binomial Distribution
1. True or False: One of the reasons that a correction for continuity adjustment is needed when
approximating the binomial distribution with a normal distribution is because the normal
distribution is used for a discrete random variable while the binomial distribution is used for a
continuous random variable.
2. True or False: One of the reasons that a correction for continuity adjustment is needed when
approximating the binomial distribution with a normal distribution is because the probability of
getting a specific value of a random variable is zero with the normal distribution.
3. True or False: One of the reasons that a correction for continuity adjustment is needed when
approximating the binomial distribution with a normal distribution is because a random variable
having a binomial distribution can have only a specified value while a random variable having a
normal distribution can take on any values within an interval around that specified value.
4. True or False: To determine the probability of getting fewer than 3 events of interest in a
binomial distribution, you will find the area under the normal curve for X = 3.5 and below.
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5. True or False: To determine the probability of getting more than 3 events of interest in a binomial
distribution, you will find the area under the normal curve for X = 3.5 and above.
6. True or False: To determine the probability of getting at least 3 events of interest in a binomial
distribution, you will find the area under the normal curve for X = 2.5 and above.
7. True or False: To determine the probability of getting no more than 3 events of interest in a
binomial distribution, you will find the area under the normal curve for X = 2.5 and below.
8. True or False: To determine the probability of getting between 3 and 4 events of interest in a
binomial distribution, you will find the area under the normal curve between X = 3.5 and 4.5.
9. True or False: To determine the probability of getting between 2 and 4 events of interest in a
binomial distribution, you will find the area under the normal curve between X = 1.5 and 4.5.
10. True or False: As a general rule, one can use the normal distribution to approximate a binomial
distribution whenever the sample size is at least 30.
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11. True or False: As a general rule, one can use the normal distribution to approximate a binomial
distribution whenever the sample size is at least 15.
12. True or False: As a general rule, one can use the normal distribution to approximate a binomial
distribution whenever n
is at least 5.
13. True or False: As a general rule, one can use the normal distribution to approximate a binomial
distribution whenever
1
n
is at least 5.
14. True or False: As a general rule, one can use the normal distribution to approximate a binomial
distribution whenever
n
and
1
n
are at least 5.
SCENARIO 6-7
A company has 125 personal computers. The probability that any one of them will require repair on a
given day is 0.15.
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15. Referring to Scenario 6-7, which of the following is one of the properties required so that the
binomial distribution can be used to compute the probability that no more than 2 computers will
require repair on a given day?
a. The number of personal computers the company owns on a given day is fixed.
b. The probability that a computer that will require repair in the morning is the same as that
in the afternoon.
c. The number of computers that will require repair in the morning is independent of the
number of computers that will require repair in the afternoon.
d. The probability that two or more computers that will require repair in a given day
approaches zero.
16. Referring to Scenario 6-7, which of the following is one of the properties required so that the
binomial distribution can be used to compute the probability that no more than 2 computers will
require repair on a given day?
a. The probability that a computer that will require repair in the morning is the same as that
in the afternoon.
b. A randomly selected computer on a given day will either require a repair or will not.
c. The number of computers that will require repair in the morning is independent of the
number of computers that will require repair in the afternoon.
d. The probability that two or more computers that will require repair in a given day
approaches zero.
17. Referring to Scenario 6-7, which of the following is one of the properties required so that the
binomial distribution can be used to compute the probability that no more than 2 computers will
require repair on a given day?
a. The probability that a computer that will require repair in the morning is the same as that
in the afternoon.
b. The number of computers that will require repair in the morning is independent of the
number of computers that will require repair in the afternoon.
c. The probability that any one of the computers that will require repair on a given day will
not affect or change the probability that any other computers that will require repair on
the same day.
d. The probability that two or more computers that will require repair in a given day
approaches zero.
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18. Referring to Scenario 6-7 and assuming that the number of computers that requires repair on a
given day follows a binomial distribution, compute the probability that there will be no more than
8 computers that require repair on a given day using a normal approximation.
19. Referring to Scenario 6-7 and assuming that the number of computers that requires repair on a
given day follows a binomial distribution, compute the probability that there will be less than 8
computers that require repair on a given day using a normal approximation.
20. Referring to Scenario 6-7 and assuming that the number of computers that requires repair on a
given day follows a binomial distribution, compute the probability that there will be exactly 10
computers that require repair on a given day using a normal approximation.
21. Referring to Scenario 6-7 and assuming that the number of computers that requires repair on a
given day follows a binomial distribution, compute the probability that there will be at least 25
computers that require repair on a given day using a normal approximation.
22. Referring to Scenario 6-7 and assuming that the number of computers that requires repair on a
given day follows a binomial distribution, compute the probability that there will be more than 25
computers that require repair on a given day using a normal approximation.
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23. Referring to Scenario 6-7 and assuming that the number of computers that requires repair on a
given day follows a binomial distribution, compute the probability that there will be between 25
and 30 computers that require repair on a given day using a normal approximation.
24. Referring to Scenario 6-7 and assuming that the number of computers that requires repair on a
given day follows a binomial distribution, compute the probability that there will be more than 25
but less than 30 computers that require repair on a given day using a normal approximation.
25. Referring to Scenario 6-7 and assuming that the number of computers that requires repair on a
given day follows a binomial distribution, compute the probability that there will be less than 25
or more than 30 computers that require repair on a given day using a normal approximation.
Online Topics OLT-11
CHAPTER 7: SAMPLING DISTRIBUTIONS
Section 7.4 Online Topic: Sampling from Finite
Populations
1. The use of the finite population correction factor when sampling without replacement from finite
populations will
a) increase the standard error of the mean.
b) not affect the standard error of the mean.
c) reduce the standard error of the mean.
d) only affect the proportion, not the mean.
2. You use the finite population correction factor when
a) you sample without replacement and the sample size is larger than 5% of the population
size.
b) you sample without replacement and the sample size is smaller than 5% of the population
size.
c) you sample with replacement and the sample size is larger than 5% of the population size.
d) you sample with replacement and the sample size is smaller than 5% of the population
size.
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3. The finite population correction factor is
a)
1N
Nn
b)
1
Nn
N
c)
1
Nn
N
n
d)
1N
Nn
n
SCENARIO 7-7
Times spent studying by students in the week before final exams follow a normal distribution with
standard deviation 8 hours. A random sample of 4 students was taken from a population of 50 in
order to estimate the mean study time for the population of all students. Use the finite population
correction.
4. Referring to Scenario 7-7, what is the standard error of all the sample means?
5. Referring to Scenario 7-7, what is the probability that the sample mean exceeds the population
mean by more than 2 hours?
6. Referring to Scenario 7-7, what is the probability that the sample mean is more than 3 hours
below the population mean?
Online Topics OLT-13
7. Referring to Scenario 7-7, what is the probability that the sample mean differs from the
population mean by less than 2 hours?
8. Referring to Scenario 7-7, what is the probability that the sample mean differs from the
population mean by more than 3 hours?
9. Referring to Scenario 7-7, 5% of all the samples of 4 will have a sample mean of at least how
many hours above the population mean?
10. Referring to Scenario 7-7, 10% of all the samples of 4 will have a sample mean of at least how
many hours below the population mean?
11. Referring to Scenario 7-7, 90% of all the samples of 4 will have a sample mean of no more than
how many hours from the population mean?
12. Referring to Scenario 7-7, 80% of all the samples of 4 will have a sample mean of no more than
how many hours from the population mean?
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SCENARIO 7-8
According to a survey, only 15% of customers who visited the web site of a major retail store made a
purchase. Random samples of size 50 are selected from a population of 900. Use the finite
population correction factor.
13. Referring to Scenario 7-8, the mean of all the sample proportions of 50 customers who will make
a purchase after visiting the web site is _______.
14. Referring to Scenario 7-8, the standard error of all the sample proportions of customers who will
make a purchase after visiting the web site is ________.
15. True or False: Referring to Scenario 7-8, the requirements for using a normal distribution to
approximate a binomial distribution is fulfilled.
16. Referring to Scenario 7-8, what proportion of the samples will have between 20% and 30% of
customers who will make a purchase after visiting the web site?..
17. Referring to Scenario 7-8, what proportion of the samples will have less than 15% of customers
who will make a purchase after visiting the web site?
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18. Referring to Scenario 7-8, what is the probability that a random sample of 50 will have at least
30% of customers who will make a purchase after visiting the web site?
19. Referring to Scenario 7-8, 90% of the samples will have less than what percentage of customers
who will make a purchase after visiting the web site?
20. Referring to Scenario 7-8, 90% of the samples will have more than what percentage of
customers who will make a purchase after visiting the web site?
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CHAPTER 8: CONFIDENCE INTERVAL ESTIMATION
Section 8.6 Online Topic: Application of Confidence Interval
Estimation in Auditing
SCENARIO 8-12
The superintendent of a unified school district of a small town wants to make sure that no more than
5% of the students skip more than 10 days of school in a year. A random sample of 145 students
from a population of 800 showed that 12 students skipped more than 10 days of school last year.
1. Referring to Scenario 8-12, what is the critical value for the 95% one-sided confidence interval for the
proportion of students who skipped more than 10 days of school last year?
2. Referring to Scenario 8-12, what is the upper bound of the 95% one-sided confidence interval for the
proportion of students who skipped more than 10 days of school last year?
3. True or False: Referring to Scenario 8-12, the superintendent can conclude with 95% level of
confidence that no more than 5% of the students in the unified school district skipped more than 10
days of school last year.
SCENARIO 8-13
The president of a university is concerned that illicit drug use on campus is higher than the 5%
targeted level. A random sample of 250 students from a population of 2,000 revealed that 7 of them
had used illicit drugs during the last 12 months.
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4. Referring to Scenario 8-13, what is the critical value for the 90% one-sided confidence interval for the
proportion of students who had used illicit drugs during the last 12 months?
5. Referring to Scenario 8-13, what is the upper bound of the 90% one-sided confidence interval for the
proportion of students who had used illicit drugs during the last 12 months?
6. True or False: Referring to Scenario 8-13, the president can be 90% confident that no more than 5%
of the students at the university had used illicit drugs during the last 12 months.
7. True or False: Referring to Scenario 8-13, using the 90% one-sided confidence interval, the president
can be 95% confident that no more than 5% of the students at the university had used illicit drugs
during the last 12 months.
8. True or False: Referring to Scenario 8-13, using the 90% one-sided confidence interval, the president
can be 85% confident that no more than 5% of the students at the university had used illicit drugs
during the last 12 months.
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SCENARIO 8-14
The president of a university is concerned that the percentage of students who have cheated on an
exam is higher than the 1% acceptable level. A confidential random sample of 1,000 students from a
population of 7,000 revealed that 6 of them said that they had cheated on an exam during the last
semester.
9. Referring to Scenario 8-14, what is the critical value for the 90% one-sided confidence interval for the
proportion of students who had cheated on an exam during the last 12 months?
10. Referring to Scenario 8-14, what is the upper bound of the 90% one-sided confidence interval for the
proportion of students who had cheated on an exam during the last 12 months?
11. True or False: Referring to Scenario 8-14, the president can be 90% confident that no more than 1%
of the students at the university had cheated on an exam during the last semester.
12. True or False: Referring to Scenario 8-14, using the 90% one-sided confidence interval, the president
can be 95% confident that no more than 1% of the students at the university had cheated on an exam
during the last semester.
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13. True or False: Referring to Scenario 8-14, using the 90% one-sided confidence interval, the
superintendent can be 85% confident that no more than 1% of the students at the university had
cheated on an exam during the last semester.
SCENARIO 8-15
A wealthy real estate investor wants to decide whether it is a good investment to build a high-end
shopping complex in a suburban county in Chicago. His main concern is the total market value of the
3,605 houses in the suburban county. He commissioned a statistical consulting group to take a
sample of 200 houses and obtained a sample mean market price of $225,000 and a sample standard
deviation of $38,700. The consulting group also found out that the mean differences between market
prices and appraised prices was $125,000 with a standard deviation of $3,400. Also the proportion of
houses in the sample that are appraised for higher than the market prices is 0.24.
14. Referring to Scenario 8-15, what will be the 90% confidence interval for the total difference
between the market prices and appraised prices of the houses in the suburban county constructed
by the consulting group?
15. Referring to Scenario 8-15, what will be the 90% confidence interval for the total market price of
the houses in the suburban county constructed by the consulting group?
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Section 8.7 Online Topic: Estimation and Sample Size
Determination for Finite Populations
SCENARIO 8-16
A random sample of 100 stores from a large chain of 500 garden supply stores was selected to
determine the mean number of lawnmowers sold at an end-of-season clearance sale. The sample
results indicated a mean of 6 and a standard deviation of 2 lawnmowers sold. A 95% confidence
interval (5.623 to 6.377) was established based on these results.
16. True or False: Referring to Scenario 8-16, if the population had consisted of 1,000 stores, the
confidence interval estimate of the mean with finite population correction would have been wider
in range.
17. True or False: Referring to Scenario 8-16, if the population had consisted of 400 stores, the
confidence interval estimate of the mean with finite population correction would have been wider
in range.
18. True or False: Referring to Scenario 8-16, the confidence interval estimate of the mean with finite
population correction will be wider in range than confidence interval estimate without finite
population correction.
19. True or False: Referring to Scenario 8-16, of all possible samples of 100 stores drawn from the
population of 1,000 stores, 95% of the sample means will fall between 5.623 and 6.377
lawnmowers.
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20. True or False: Referring to Scenario 8-16, of all possible samples of 100 stores taken from the
population of 1,000 stores, 95% of the confidence intervals developed will contain the true
population mean within the interval.
21. True or False: Referring to Scenario 8-16, there are 10 possible samples of 100 stores that can be
selected out of the population of 1,000 stores.
22. True or False: Referring to Scenario 8-16, 95% of the stores have sold between 5.623 and 6.377
lawnmowers.
23. True or False: Referring to Scenario 8-16, we do not know for sure whether the true population
mean is between 5.623 and 6.377 lawnmowers sold.
SCENARIO 8-17
A wealthy real estate investor wants to decide whether it is a good investment to build a high-end
shopping complex in a suburban county in Chicago. His main concern is the total market value of the
3,605 houses in the suburban county. He commissioned a statistical consulting group to take a
sample of 200 houses and obtained a sample mean market price of $225,000 and a sample standard
deviation of $38,700. The consulting group also found out that the mean differences between market
prices and appraised prices was $125,000 with a standard deviation of $3,400. Also the proportion of
houses in the sample that are appraised for higher than the market prices is 0.24.
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24. Referring to Scenario 8-17, if he wants a 95% confidence on estimating the true population mean
market price of the houses in the suburban county to be within $10,000, how large a sample will
he need?
25. Referring to Scenario 8-17, what will be the 90% confidence interval for the mean market price
of the houses in the suburban county constructed by the consulting group?
26. Referring to Scenario 8-17, what will be the 90% confidence interval for the population
proportion of houses that will be appraised for higher than the market prices?
Online Topics OLT-23
Section 8.8 Online Topic: Bootstrapping
1. True or False: Bootstrapping is used to construct an interval estimate for the population mean
when you cannot assume that the population is normally distributed and the sample size is not
large enough to apply the Central Limit Theorem.
2. True or False: Bootstrapping makes no assumption about the underlying population distribution.
3. True or False: To construct a bootstrap confidence interval estimate for the population mean, you
will first select a random sample of size n with replacement from a population of size N as the
initial sample.
4. True or False: To construct a bootstrap confidence interval estimate for the population mean, you
will first select a random sample of size n without replacement from a population of size N as the
initial sample.
5. True or False: To construct a bootstrap confidence interval estimate for the population mean, you
will resample the initial sample by selecting n values with replacement from the n values in the
initial sample for m different times.
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6. True or False: To construct a bootstrap confidence interval estimate for the population mean, you
will resample the initial sample of size n by selecting n values without replacement from the n
values in the initial sample for m different times.
7. True or False: To construct a bootstrap confidence interval estimate for the population mean, you
will order the resampled means for the m samples that you have drawn from the initial sample of
size n, use the value of the resampled mean that cuts off the smallest
/ 2 100%
as the lower
limit and the value of that cuts off the largest
/ 2 100%
as the upper limit.
8. True or False: To construct bootstrap confidence interval estimate for the population mean with
confidence level
1 100%
, you will order the resampled means for the m samples that you
have drawn from the initial sample of size n, use the value of the resampled mean that cuts off the
largest
/ 2 100%
as the lower limit and the value of that cuts off the smallest
/ 2 100%
as the upper limit.
9. True or False: To construct bootstrap confidence interval estimate for the population mean with
confidence level
1 100%
, you will order the resampled means for the m samples that you
have drawn from the initial sample of size n, use the value of the resampled mean that cuts off the
smallest
/ 2 100%
as the lower limit and the value of that cuts off the largest
/ 2 100%
as the upper limit.
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10. True or False: To construct a bootstrap confidence interval estimate with confidence level
1 100%
for the population mean, you will order the resampled means for the m samples
that you have drawn from the initial sample of size n, use the value of the resampled mean that
cuts off the smallest
100%
as the lower limit and the value of that cuts off the largest
100%
as the upper limit.
11. True or False: The bootstrap confidence interval estimate for the population mean is constructed
based on the sampling distribution of the m resampled means.
12. True or False: The bootstrap confidence interval estimate for the population mean is constructed
based on the sampling distribution of the m population means.
13. True or False: To construct a bootstrap confidence interval estimate for the population mean, you
typically select a very large number (in the thousands) of resamples.
14. True or False: To construct a bootstrap confidence interval estimate for the population mean, you
do not need a very large number (in the thousands) of resamples.
15. True or False: The number of resamples is irrelevant in constructing a bootstrap confidence
interval estimate for the population mean.
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CHAPTER 9: FUNDAMENTALS OF HYPOTHESIS
TESTING: ONE-SAMPLE TESTS
Section 9.6 Online Topic: The Power of a Test
16. If we are performing a two-tail test of whether
= 100, the probability of detecting a shift of the
mean to 105 will be ________ the probability of detecting a shift of the mean to 110.
a) less than
b) greater than
c) equal to
d) not comparable to
17. True or False: For a given level of significance, if the sample size is increased but the summary
statistics remain the same, the power of the test will increase.
SCENARIO 9-11
An appliance manufacturer claims to have developed a compact microwave oven that consumes a
population mean of no more than 250 W. From previous studies, it is believed that power
consumption for microwave ovens is normally distributed with a population standard deviation of 15
W. If there is evidence that the population mean consumption is greater than 250 W, the manufacturer
will be unable to make the claim.
18. Referring to Scenario 9-11, if you select a sample of 20 compact microwave ovens and are
willing to have a level of significance of 0.05, the probability of making a Type II error is _____
if the mean power consumption of all such microwave ovens is in fact 257.3 W.
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19. Referring to Scenario 9-11, if you select a sample of 20 compact microwave ovens and are
willing to have a level of significance of 0.05, the probability of making a Type II error is _____
if the mean power consumption of all such microwave ovens is in fact 248 W.
20. Referring to Scenario 9-11, if you select a sample of 20 compact microwave ovens and are
willing to have a level of significance of 0.10, the probability of making a Type II error is _____
if the mean power consumption of all such microwave ovens is in fact 257.3 W.
21. Referring to Scenario 9-11, if you select a sample of 20 compact microwave ovens and are
willing to have a level of significance of 0.10, the probability of making a Type II error is _____
if the mean power consumption of all such microwave ovens is in fact 248 W.
22. Referring to Scenario 9-11, if you select a sample of 20 compact microwave ovens and are
willing to have a level of significance of 0.01, the probability of making a Type II error is _____
if the mean power consumption of all such microwave ovens is in fact 257.3 W.
23. Referring to Scenario 9-11, if you select a sample of 20 compact microwave ovens and are
willing to have a level of significance of 0.01, the probability of making a Type II error is _____
if the mean power consumption of all such microwave ovens is in fact 248 W.
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SCENARIO 9-12
A drug company is considering marketing a new local anesthetic. The effective time of the anesthetic
the drug company is currently producing has a normal distribution with a mean of 7.4 minutes with a
standard deviation of 1.2 minutes. The chemistry of the new anesthetic is such that the effective time
should be normally distributed with the same standard deviation. The company will market the new
local anesthetic as being better if there is evidence that the population mean effective time is greater
than the 7.4 minutes of the current local anesthetic.
24. Referring to Scenario 9-12, if you select a sample of 25 new local anesthetics and are willing to
have a level of significance of 0.1, the probability of a Type II error is _____ if the population
mean effective time is 8 minutes.
25. Referring to Scenario 9-12, if you select a sample of 25 new local anesthetics and are willing to
have a level of significance of 0.1, the probability of a Type I error is _____ if the population
mean effective time is 8 minutes.
26. Referring to Scenario 9-12, if you select a sample of 25 new local anesthetics and are willing to
have a level of significance of 0.1, the confidence coefficient of the test is _____ if the population
mean effective time is 8 minutes.
27. Referring to Scenario 9-12, if you select a sample of 25 new local anesthetics and are willing to
have a level of significance of 0.05, the probability of the company failing to market the new
local anesthetic when it is better is _____ if the population mean effective time is 8 minutes.
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28. Referring to Scenario 9-12, if you select a sample of 25 new local anesthetics and are willing to
have a level of significance of 0.05, the probability of the company incorrectly marketing the new
local anesthetic when it is not better is _____.
29. Referring to Scenario 9-12, if you select a sample of 25 new local anesthetics and are willing to
have a level of significance of 0.05, the probability of the company not marketing the new local
anesthetic when it is not better is _____.
30. Referring to Scenario 9-12, if you select a sample of 25 new local anesthetics and are willing to
have a level of significance of 0.01, the probability of the company failing to market the new
local anesthetic when its population mean effective time is greater than the 7.4 minutes is _____
if the population mean effective time is 8 minutes.
31. Referring to Scenario 9-12, if you select a sample of 25 new local anesthetics and are willing to
have a level of significance of 0.01, the probability of the company incorrectly marketing the new
local anesthetic when its population mean effective time is not greater than the 7.4 minutes is
_____.
32. Referring to Scenario 9-12, if you select a sample of 25 new local anesthetics and are willing to
have a level of significance of 0.01, the probability of the company not marketing the new local
anesthetic when its population mean effective time is not greater than the 7.4 minutes is _____.
OLT-30 Online Topics
SCENARIO 9-13
A manufacturer produces light bulbs that have a mean life of at least 500 hours when the production
process is working properly. Based on past experience, the population standard deviation is 50 hours
and the light bulb life is normally distributed. The operations manager stops the production process if
there is evidence that the population mean light bulb life is below 500 hours.
33. Referring to Scenario 9-13, if you select a sample of 100 light bulbs and are willing to have a
level of significance of 0.10, the power of the test is _____ if the population mean bulb life is 490
hours.
34. Referring to Scenario 9-13, if you select a sample of 100 light bulbs and are willing to have a
level of significance of 0.05, the probability of the operations manager stopping the process when
the process is not working properly is _____ if the population mean bulb life is 490 hours.
35. Referring to Scenario 9-13, if you select a sample of 100 light bulbs and are willing to have a
level of significance of 0.01, the probability of the operations manager stopping the process if the
population mean bulb life is 490 hours is _____.
SCENARIO 9-14
An appliance manufacturer claims to have developed a compact microwave oven that consumes a
population mean of no more than 250 W. From previous studies, it is believed that power
consumption for microwave ovens is normally distributed with a population standard deviation of 15
W. If there is evidence that the population mean consumption is greater than 250 W, the manufacturer
will be unable to make the claim.
36. Referring to Scenario 9-14, if you select a sample of 20 compact microwave ovens and are
willing to have a level of significance of 0.05, the power of the test is _____ if the mean power
consumption of all such microwave ovens is in fact 257.3 W.
Online Topics OLT-31
37. Referring to Scenario 9-14, if you select a sample of 20 compact microwave ovens and are
willing to have a level of significance of 0.05, the power of the test is _____ if the mean power
consumption of all such microwave ovens is in fact 248 W.
38. Referring to Scenario 9-14, if you select a sample of 20 compact microwave ovens and are
willing to have a level of significance of 0.10, the power of the test is _____ if the mean power
consumption of all such microwave ovens is in fact 257.3 W.
39. Referring to Scenario 9-14, if you select a sample of 20 compact microwave ovens and are
willing to have a level of significance of 0.10, the power of the test is _____ if the mean power
consumption of all such microwave ovens is in fact 248 W.
40. Referring to Scenario 9-14, if you select a sample of 20 compact microwave ovens and are
willing to have a level of significance of 0.01, the power of the test is _____ if the mean power
consumption of all such microwave ovens is in fact 257.3 W.
41. Referring to Scenario 9-14, if you select a sample of 20 compact microwave ovens and are
willing to have a level of significance of 0.01, the power of the test is _____ if the mean power
consumption of all such microwave ovens is in fact 248 W.
OLT-32 Online Topics
SCENARIO 9-15
A drug company is considering marketing a new local anesthetic. The effective time of the anesthetic
the drug company is currently producing has a normal distribution with a mean of 7.4 minutes with a
standard deviation of 1.2 minutes. The chemistry of the new anesthetic is such that the effective time
should be normally distributed with the same standard deviation. The company will market the new
local anesthetic as being better if there is evidence that the population mean effective time is greater
than the 7.4 minutes of the current local anesthetic.
42. Referring to Scenario 9-15, if you select a sample of 25 new local anesthetics and are willing to
have a level of significance of 0.1, the power of the test is _____ if the population mean effective
time is 8 minutes.
43. Referring to Scenario 9-15, if you select a sample of 25 new local anesthetics and are willing to
have a level of significance of 0.05, the probability of the company marketing the new local
anesthetic when it is better is _____ if the population mean effective time is 8 minutes.
44. Referring to Scenario 9-15, if you select a sample of 25 new local anesthetics and are willing to
have a level of significance of 0.01, the probability of the company marketing the new local
anesthetic when its population mean effective time is greater than the 7.4 minutes is _____ if the
population mean effective time is 8 minutes.
Online Topics OLT-33
CHAPTER 10: TWO-SAMPLE TESTS
Section 10.5 Online Topic: Effect Size
1. True or False: Statistical significance does not necessarily imply practical significance.
2. True or False: Practical significance always implies statistical significance.
3. True or False: Statistical significance can eventually be found when the sample size becomes
large enough.
4. True or False: Practical significance can eventually be found when the sample size becomes large
enough.
5. True or False: In measuring the effect size of the difference between two population means, the
rule of thumb suggests that a standardized effect size of around 0.2 can be classified as large.
OLT-34 Online Topics
6. True or False: In measuring the effect size of the difference between two population means, the
rule of thumb suggests that a standardized effect size of around 0.2 can be classified as small.
7. True or False: In measuring the effect size of the difference between two population means, the
rule of thumb suggests that a standardized effect size of around 0.5 can be classified as large.
8. True or False: In measuring the effect size of the difference between two population means, the
rule of thumb suggests that a standardized effect size of around 0.5 can be classified as medium.
9. True or False: In measuring the effect size of the difference between two population means, the
rule of thumb suggests that a standardized effect size of around 0.8 can be classified as large.
10. True or False: In measuring the effect size of the difference between two population means, the
rule of thumb suggests that a standardized effect size of around 0.8 can be classified as medium.
Online Topics OLT-35
CHAPTER 12: CHI-SQUARE TESTS AND
NONPARAMETRIC TESTS
Section 12.6 Online Topic: McNemar Test for the Difference
Between Two Proportions (Related Samples)
11. True or False: The McNemar test is used to determine whether there is evidence of a difference
between the proportions of two related samples.
12. True or False: To test whether one proportion is higher than the other in two related samples, you
can use the Marascuilo procedure.
13. True or False: To test whether one proportion is higher than the other in two related samples, you
can use the McNemar test.
14. True or False: The McNemar test is approximately distributed as a Student’s t.
15. True or False: The McNemar test is approximately distributed as a standardized normal random
variable.
OLT-36 Online Topics
16. The director of a training program wanted to know if a one week orientation would change the
perception of potential clients who would perceive the program as being good. He collected
information on the number of clients who would rate the program as being good before and after
the orientation. Which of the following tests will be the most appropriate?
a)
2
test for proportions.
b) McNemar test.
c) Wilcoxon rank sum test.
d) Tukey-Kramer procedure.
SCENARIO 12-18
The director of transportation of a large company is interested in the usage of the company’s van pool
program. She surveyed 129 of her employees on the usage of the program before and after a
campaign to convince her employees to use the service and obtained the following:
Before
Use
Do Not Use
Total
After
Use
27
44
71
Do Not Use
33
25
58
Total
60
69
129
She will use this information to perform test using a level of significance of 0.05.
17. Referring to Scenario 12-18, the director now wants to know if the proportion of employees who
use the service before the campaign and the proportion of employees who use the service after the
campaign are the same. Which test should she use?
a)
2
-test for difference in proportions
b) Z–test for difference in proportions
c) McNemar test for difference in proportions
d) Wilcoxon rank sum test
Online Topics OLT-37
18. Referring to Scenario 12-18, the director now wants to know if the proportion of employees who
use the service before the campaign and the proportion of employees who use the service after the
campaign are the same. What is the value of the test statistic using a 5% level of significance?
19. Referring to Scenario 12-18, the director now wants to know if the proportion of employees who
use the service before the campaign and the proportion of employees who use the service after the
campaign are the same. What is the p-value of the test statistic using a 5% level of significance?
20. True or False: Referring to Scenario 12-18, the director now wants to know if the proportion of
employees who use the service before the campaign and the proportion of employees who use the
service after the campaign are the same. She should reject the null hypothesis using a 5% level of
significance.
21. Referring to Scenario 12-18, the director now wants to know if the proportion of employees who
use the service before the campaign and the proportion of employees who use the service after the
campaign are the same. What should be her conclusion?
a) There is sufficient evidence that the proportion of employees who use the service before
the campaign is the same as the proportion of employees who use the service after the
campaign.
b) There is insufficient evidence that the proportion of employees who use the service
before the campaign is the same as the proportion of employees who use the service after
the campaign.
c) There is sufficient evidence that the proportion of employees who use the service before
the campaign is not the same as the proportion of employees who use the service after the
campaign.
d) There is insufficient evidence that the proportion of employees who use the service
before the campaign is not the same as the proportion of employees who use the service
after the campaign.
OLT-38 Online Topics
SCENARIO 12-19
The director of the MBA program of a state university wanted to know if a one week orientation
would change the proportion among potential incoming students who would perceive the program as
being good. Given below is the result from 215 students’ view of the program before and after the
orientation.
After the Orientation
Before the Orientation
Good
Not Good
Total
Good
93
37
130
Not Good
71
14
85
Total
164
51
215
22. Referring to Scenario 12-19, which test should she use?
a)
2
-test for difference in proportions
b) Z–test for difference in proportions
c) McNemar test for difference in proportions
d) Wilcoxon rank sum test
23. Referring to Scenario 12-19, what is the value of the test statistic using a 1% level of
significance?
24. Referring to Scenario 12-19, what is the p-value of the test statistic using a 5% level of
significance?
25. True or False: Referring to Scenario 12-19, the director should reject the null hypothesis using a
1% level of significance.
Online Topics OLT-39
26. Referring to Scenario 12-19, what should be the director’s conclusion?
a) There is sufficient evidence that the proportion of potential incoming students who
perceive the program as being good is the same before and after the orientation.
b) There is insufficient evidence that the proportion of potential incoming students who
perceive the program as being good is the same before and after the orientation.
c) There is sufficient evidence that the proportion of potential incoming students who
perceive the program as being good is not the same before and after the orientation.
d) There is insufficient evidence that the proportion of potential incoming students who
perceive the program as being good is not the same before and after the orientation.
OLT-40 Online Topics
Section 12.7 Chi-Square Test for the Variance or
Standard Deviation
SCENARIO 12-20
A filling machine at a local soft drinks company is calibrated to fill the cans at a mean amount of 12
fluid ounces and a standard deviation of 0.5 ounces. The company wants to test whether the standard
deviation of the amount filled by the machine is 0.5 ounces. A random sample of 15 cans filled by
the machine reveals a standard deviation of 0.67 ounces.
27. Referring to Scenario 12-20, the parameter of interest in the test is ________.
28. Referring to Scenario 12-20, which is the appropriate test to use?
a)
2
-test of independence
b) Kruskal-Wallis rank test
c) Wilcoxon rank sum test
d)
2
-test of population variance
29. True or : Referring to Scenario 12-20, in order to perform the test, you need to assume that the
amount filled by the machine follows a normal distribution.
30. Referring to Scenario 12-18, what type of test should be performed?
a) Lower-tail test
b) Upper-tail test
c) Two-tail test
d) None of the above
Online Topics OLT-41
31. Referring to Scenario 12-20, what are the lower and upper critical values of the test when
allowing for 5% probability of committing a type I error?
32. Referring to Scenario 12-20, what is the value of the test statistic?
33. True or : Referring to Scenario 12-20, the decision is to reject the null hypothesis when using a
5% level of significance.
34. True or False: Referring to Scenario 12-20, there is sufficient evidence to conclude that the
standard deviation of the amount filled by the machine is not exactly 0.5 ounces when using a 5%
level of significance.
35. True or False: Referring to Scenario 12-20, the decision is to reject the null hypothesis when
using a 10% level of significance.
36. True or False: Referring to Scenario 12-20, there is sufficient evidence to conclude that the
standard deviation of the amount filled by the machine is not exactly 0.5 ounces when using a
10% level of significance.
OLT-42 Online Topics
37. True or False: Referring to Scenario 12-20, the p–value of the test is somewhere between 5% and
10%.
Online Topics OLT-43
Section 12.8 Online Topic: Wilcoxon Signed Ranks Test:
Nonparametric Analysis for Two Related Populations
38. In testing for whether the median difference of two related populations is zero, the null hypothesis
is
a)
0: 0
D
HM
.
b)
0: 0
D
HM
.
c)
0 1 2
: 0H M M
.
d)
0 1 2
: 0H M M
.
39. True or False: A researcher is curious about the effect of sleep on students’ test performances. He
chooses 60 students and gives each 2 tests: one given after 2 hours’ sleep and one after 8 hours’
sleep. The test the researcher should use would be a related samples test.
SCENARIO 12-21
A perfume manufacturer is trying to choose between 2 magazine advertising layouts. An expensive
layout would include a small package of the perfume. A cheaper layout would include a “scratch-
and-sniff” sample of the product. The manufacturer would use the more expensive layout only if
there is evidence that it would lead to a higher approval rate. The manufacturer presents both layouts
to 5 groups and determines the approval rating from each group on both layouts. The data are given
below. Use this to test whether the median difference in approval rating is different from zero in
favor of the more expensive layout with a level of significance of 0.05.
Package Scratch
52 37
68 43
43 53
48 39
56 47
OLT-44 Online Topics
40. Referring to Scenario 12-21, what is the right test to use?
a) Wilcoxon rank sum test for difference in median
b) Wilcoxon rank sum test for median difference
c) Wilcoxon signed rank test for difference in median
d) Wilcoxon signed rank test for median difference
41. Referring to Scenario 12-21, the hypotheses that should be used are:
a)
01
: 0 versus : 0
DD
H M H M
b)
01
: 0 versus : 0
DD
H M H M
c)
H0:M1M2 versus H1:M1M2
d)
H0:M1M2 versus H1:M1M2
42. Referring to Scenario 12-21, what are the lower and upper critical values of the test?
43. Referring to Scenario 12-21, what is the rank of the absolute difference for the last pair of
observations?
44. Referring to Scenario 12-21, which pair(s) of observations has a negative signed rank?
Online Topics OLT-45
45. Referring to Scenario 12-21, what is the value of the test statistic?
46. True or False: Referring to Scenario 12-21, the null hypothesis should be rejected.
47. Referring to Scenario 12-21, the perfume manufacturer will
a) use the “scratch-and-sniff” layout because there is insufficient evidence to do otherwise.
b) use the package layout because there is insufficient evidence to do otherwise.
c) use the “scratch-and-sniff” layout because there is sufficient evidence to conclude that
this is the best course of action.
d) use the package layout because there is sufficient evidence to conclude that this is the
best course of action.
OLT-46 Online Topics
Section 12.9 Online Topic: Friedman Rank Test: Nonparametric
Analysis for the Randomized Block Design
48. When the normality assumption is not met in a randomized block design, which of the following
tests should be used?
a) Wilcoxn rank sum test
b)
2
test
c) Kruskal-Wallis test
d) Friedman rank test
49. True or False: If the number of blocks in the experiment is larger than 5, the Friedman rank test
statistic can be approximated by a standardized normal distribution.
50. True or False: If the number of blocks in the experiment is larger than 5, the Friedman rank test
statistic can be approximated by a chi-square distribution.
Online Topics OLT-47
SCENARIO 12-22
An agronomist wants to compare the crop yield of 3 varieties of chickpea seeds. She plants all 3
varieties of the seeds on each of 5 different patches of fields. She then measures the crop yield in
bushels per acre. Treating this as a randomized block design, the results are presented in the table that
follows.
Fields Smith Walsh Trevor
1 11.1 19.0 14.6
2 13.5 18.0 15.7
3 15.3 19.8 16.8
4 14.6 19.6 16.7
5 9.8 16.6 15.2
Below is the Minitab output of the Friedman rank test:
Friedman Test: Yield versus Varieties, Fields
Friedman test for Yield by Varietie blocked by Fields
S = 10.00 DF = 2 P = 0.007
Est Sum of
Varietie N Median Ranks
Smith 5 13.500 5.0
Trevor 5 15.667 10.0
Walsh 5 18.533 15.0
Grand median = 15.900
51. Referring to Scenario 12-22, the null hypothesis for the Friedman rank test is
a)
0 Field 1 Field 2 Field 3 Field 4 Field 5
:H
b)
0 Smith W alsh Trevor
:H
c)
0 Field 1 Field 2 Field 3 Field 4 Field 5
:H M M M M M
d)
0 Smith Walsh Trevor
:H M M M
52. Referring to Scenario 12-22, what are the degrees of freedom of the Friedman rank test for the
difference in the medians at a level of significance of 0.01?
OLT-48 Online Topics
53. Referring to Scenario 12-22, what is the critical value of the Friedman rank test for the difference
in the medians at a level of significance of 0.01?
54. Referring to Scenario 12-22, what is the value of the test statistic for the Friedman rank test for
the difference in the medians?
55. True or False: Referring to Scenario 12-22, the null hypothesis for the Friedman rank test for the
difference in the means should be rejected at a 0.01 level of significance.
56. True or False: Referring to Scenario 12-22, the decision made at a 0.01 level of significance on
the Friedman rank test for the difference in medians implies that all 3 medians are significantly
different.
57. True or False: Referring to Scenario 12-22, the decision made at a 0.01 level of significance on
the Friedman rank test for the difference in medians implies that the 3 medians are not all the
same.
58. True or False: Referring to Scenario 12-22, the Friedman rank test is valid only if there is no
interaction between the 5 blocks and the 3 treatment levels.
Online Topics OLT-49
59. True or False: Referring to Scenario 12-22, the Friedman rank test is valid only if the 5 blocks are
independent so that the yields in one block have no influence on the yields in any other block.
OLT-50 Online Topics
CHAPTER 16: TIME-SERIES FORECASTING
Section 16.8 Online Topic: Index Numbers
1. True or False: A simple price index tracks the price of a group of commodities at a given
period of time to the price paid for that group of commodities at a particular point of time in
the past.
2. True or False: For a price index, it is preferable to select the base period in a period of
economic stability.
3. True or False: The base period should be recent so that a price index is not severely affected
by change in technology, and consumer attitudes and habits.
4. True or False: The more expensive commodities are overly influential in an unweighted
aggregate price index.
5. True or False: The changes in the price of the least consumed commodities are overly
influential in a weighted aggregate price index.
Online Topics OLT-51
6. True or False: Unweighted aggregate price indices account for differences in the magnitude
of prices per unit and differences in the consumption levels of the items in the market basket.
7. True or False: The Laspeyres price index is a form of weighted aggregate price index.
8. True or False: The Paasche price index is a form of unweighted aggregate price index.
9. True or False: The Laspeyres price index uses the initial consumption quantities as the
weights.
10. True or False: The Paasche price index uses the consumption quantities in the year of interest
as the weights.
11. True or False: The Paasche price index reflects more accurately the consumption cost at a
point in time because it uses the consumption quantities in the initial year as the base.
OLT-52 Online Topics
12. True or False: The Paasche price index has the disadvantage that current consumption
quantities are usually hard to obtain.
13. True or False: The Laspeyres price index has the disadvantage that the consumption pattern
in the initial period might be quite different from that in the current period and, hence, does
not reflect accurately the current consumption cost.
14. True of False: The consumer price index is a Paasche price index.
SCENARIO 16-15
Given below are the average prices for three types of energy products for five consecutive years.
Year
Electricity
Natural Gas
Fuel Oil
1
43.205
25.893
0.892
2
16.959
28.749
0.969
3
47.202
28.933
1.034
4
48.874
29.872
0.913
5
48.693
28.384
0.983
15. Referring to Scenario 16-15, what are the simple price indices for electricity, natural gas and
fuel oil, respectively, in year 3 using year 1 as the base year?
16. Referring to Scenario 16-15, what are the simple price indices for electricity, natural gas and
fuel oil, respectively, in year 4 using year 1 as the base year?
Online Topics OLT-53
17. Referring to Scenario 16-15, what are the simple price indices for electricity, natural gas and
fuel oil, respectively, in year 5 using year 1 as the base year?
18. Referring to Scenario 16-15, what are the simple price indices for electricity, natural gas and
fuel oil, respectively, in year 1 using year 5 as the base year?
19. Referring to Scenario 16-15, what are the simple price indices for electricity, natural gas and
fuel oil, respectively, in year 2 using year 5 as the base year?
20. Referring to Scenario 16-15, what are the simple price indices for electricity, natural gas and
fuel oil, respectively, in year 3 using year 5 as the base year?
21. Referring to Scenario 16-15, what is the unweighted aggregate price index for the group of
three energy items in year 3 using year 1 as the base year?
ANSWER:
110.26
TYPE: PR DIFFICULTY: Moderate
KEYWORDS: unweighted aggregate price index
22. Referring to Scenario 16-15, what is the unweighted aggregate price index for the group of
three energy items in year 4 using year 1 as the base year?
OLT-54 Online Topics
23. Referring to Scenario 16-15, , what is the unweighted aggregate price index for the group of
three energy items in year 5 using year 1 as the base year?
24. Referring to Scenario 16-15, what is the Paasche price index for the group of three energy
items in 2004 for a family that consumed 13 units of electricity, 26 units of natural gas and
235 units of fuel oil in year 3 using year 1 as the base year?
25. Referring to Scenario 16-15, what is the Paasche price index for the group of three energy
items in year 4 for a family that consumed 13 units of electricity, 26 units of natural gas and
235 units of fuel oil in year 4 using year 1 as the base year?
26. Referring to Scenario 16-15, what is the Paasche price index for the group of three energy
items in year 5 for a family that consumed 13 units of electricity, 26 units of natural gas and
235 units of fuel oil in year 5 using year 1 as the base year?
27. Referring to Scenario 16-15, what is the Laspeyres price index for the group of three energy
items in year 3 for a family that consumed 15 units of electricity, 24 units of natural gas and
200 units of fuel oil in year 1 using year 1 as the base year?
Online Topics OLT-55
28. Referring to Scenario 16-15, what is the Laspeyres price index for the group of three energy
items in year 4 for a family that consumed 15 units of electricity, 24 units of natural gas and
200 units of fuel oil in year 1 using year 1 as the base year?
29. Referring to Scenario 16-15, what is the Laspeyres price index for the group of three energy
items in year 5 for a family that consumed 15 units of electricity, 24 units of natural gas and
200 units of fuel oil in year 1 using hear 1 as the base year?
SCENARIO 16-16
Given below are the prices of a basket of four food items from 2008 to 2012.
Year
Wheat($/Bushel)
Corn($/Bushel)
Soybeans($/Bushel)
Milk($/hundredweight)
2008
4.25
3.71
7.41
15.03
2009
3.43
2.7
7.55
13.63
2010
2.63
2.3
6.05
15.18
2011
2.11
1.97
4.68
14.72
2012
2.16
1.9
4.81
12.32
30. Referring to Scenario 16-16, what are the simple price indices for wheat, corn, soybeans and
milk, respectively, in 2010 using 2008 as the base year?
31. Referring to Scenario 16-16, what are the simple price indices for wheat, corn, soybeans and
milk, respectively, in 2011 using 2008 as the base year?
OLT-56 Online Topics
32. Referring to Scenario 16-16, what are the simple price indices for wheat, corn, soybeans and
milk, respectively, in 2012 using 2008 as the base year?
33. Referring to Scenario 16-16, what are the simple price indices for wheat, corn, soybeans and
milk, respectively, in 2008 using 2012 as the base year?
34. Referring to Scenario 16-16, what are the simple price indices for wheat, corn, soybeans and
milk, respectively, in 2009 using 2012 as the base year?
35. Referring to Scenario 16-16, what are the simple price indices for wheat, corn, soybeans and
milk, respectively, in 2010 using 2012 as the base year?
36. Referring to Scenario 16-16, what is the unweighted aggregate price index for the basket of
four food items in 2010 using 2008 as the base year?
37. Referring to Scenario 16-16, what is the unweighted aggregate price index for the basket of
four food items in 2011 using 2008 as the base year?
Online Topics OLT-57
38. Referring to Scenario 16-16, what is the unweighted aggregate price index for the basket of
four food items in 2012 using 2008 as the base year?
39. Referring to Scenario 16-16, what is the Paasche price index for the basket of four food items
in 2010 that consisted of 50 bushels of wheat, 30 bushels of corn, 40 bushels of soybeans and
80 hundredweight of milk in 2010 using 2008 as the base year?
40. Referring to Scenario 16-16, what is the Paasche price index for the basket of four food items
in 2011 that consisted of 60 bushels of wheat, 40 bushels of corn, 35 bushels of soybeans and
70 hundredweight of milk in 2011 using 2008 as the base year?
41. Referring to Scenario 16-16, what is the Paasche price index for the basket of four food items
in 2012 that consisted of 40 bushels of wheat, 50 bushels of corn, 35 bushels of soybeans and
60 hundredweight of milk in 2012 using 2008 as the base year?
42. Referring to Scenario 16-16, what is the Laspeyres price index for the basket of four food
items in 2010 that consisted of 50 bushels of wheat, 30 bushels of corn, 40 bushels of
soybeans and 80 hundredweight of milk in 2008 using 2008 as the base year?
OLT-58 Online Topics
43. Referring to Scenario 16-16, what is the Laspeyres price index for the basket of four food
items in 2011 that consisted of 50 bushels of wheat, 30 bushels of corn, 40 bushels of
soybeans and 80 hundredweight of milk in 2008 using 2008 as the base year?
44. Referring to Scenario 16-16, what is the Laspeyres price index for the basket of four food
items in 2012 that consisted of 50 bushels of wheat, 30 bushels of corn, 40 bushels of
soybeans and 80 hundredweight of milk in 2008 using 2008 as the base year?
45. You have 5 stocks in your investment portfolio. You want to keep track of your portfolio’s
performance over the last 2 years. You have data on each of the stock’s average price and the
number of shares of each stock for every day of the last 2 years. Which of the following
would be the most appropriate analysis to perform?
a) Simple price index
b) Laspeyres price index
c) Unweighted price index
d) Unweighted aggregate price index.