Chapter 01

Overview of Statistics

True / False Questions

1. Statistics is the science of collecting, organizing, analyzing,
interpreting, and presenting data.
True

False

2. Inferential statistics refers to generalizing from a sample to a

population, estimating unknown parameters, drawing conclusions, and
making decisions.
True

False

3. Descriptive statistics refers to summarizing data rather than

generalizing about the population.
True

False

4. Estimating parameters and testing hypotheses are important aspects

of descriptive statistics.
True

False

5. Inconsistent treatment of data by a researcher is a symptom of poor

survey or research design.
True

False

6. Empirical data are collected through observations and/or experiments.

True

False

7. Business intelligence refers to collecting, storing, accessing, and

analyzing data on the company's operations in order to make better
business decisions.
True

False

8. When a statistician omits data contrary to her findings in a study, she

is justified as long as the sample supports her objective.
True

False

9. A strong correlation between A and B would imply that B is caused by

A.
True

False

10 The post hoc fallacy says that when B follows A then B is caused by A.
.
True False
11 A statistical test may be significant yet have no practical importance.
.
True False
12 Valid statistical inferences cannot be made when sample sizes are
. small.
True

False

13 Statistics is an essential part of critical thinking because it allows us to

. transform the empirical evidence from a sample so it will agree with
our preferred conclusions.
True

False

14 Statistical challenges include imperfect data, practical constraints, and

. ethical dilemmas.
True

False

15 A business data analyst needs a PhD in statistics.

.
True False
16 The science of statistics tells us whether the sample evidence is
. convincing.
True

False

17 Pitfalls to consider in a statistical test include nonrandom samples,

. small sample size, and lack of causal links.
True

False

18 In business communication, a table of numbers is preferred to a graph

. because it is more able to convey meaning.
True

False

19 Statistical data analysis can often distinguish between real vs.

. perceived ethical issues.
True

False

20 Excel has limited use in business because advanced statistical software

. is widely available.
True

False

21 Statistics helps surmount language barriers to solve problems in

. multinational businesses.
True

False

22 Statistics can help you handle either too little or too much information.
.
True False
23 Predicting a presidential candidate's percent of the statewide vote from
. a sample of 800 voters would be an example of inferential statistics.
True

False

24 Surveying electric vehicle owners would provide a representative

. random sample of Americans' views on global warming policies.
True

False

25 An example of descriptive statistics would be reporting the percent of

. students in your accounting class that attended the review session for
the last exam.
True

False

Multiple Choice Questions

26 "Bob must be rich. He's a lawyer, and lawyers make lots of money."
. This statement best illustrates which fallacy?

A.
B.
C.
D.

Using poor survey methods

Confusing significance with importance
Unconscious bias
Generalizing from an average to an individual

27 Which is not an ethical obligation of a statistician? Explain.

.
A. To know and follow accepted procedures
B. To ensure data integrity and accurate calculations
C. To support client wishes in drawing conclusions from the data
D. To acknowledge sources of financial support

28 Which of the following statements is correct?

.
A. A parameter is a measure that is calculated from a sample.
B. Statistics is the science of collecting, organizing, analyzing,
interpreting, and presenting data.
C. For day-to-day data business analysis, most firms rely on a large
staff of expert statisticians.
D. A statistical test result that is significant also has practical
importance.
29 Which is least likely to be an application where statistics will be
. useful?

A.
B.
C.
D.

Predicting whether an airfare is likely to rise or fall

Designing the most desirable features for a ski pass
Deciding whether offering Rice Krispies improves restaurant sales
Choosing the wording of a corporate policy prohibiting smoking

30 Because 25 percent of the students in my morning statistics class

. watch eight or more hours of television a week, I conclude that 25
percent of all students at the university watch eight or more hours of
television a week. The most important logical weakness of this
conclusion would be:

A. relying on any sample instead of surveying every student.

B. using a sample that may not be representative of all students.
C. failing to correct for unconscious interviewer bias.
D. assuming cause and effect where none exists.
31 Which of the following is not a characteristic of an ideal statistician?
.
A.
B.
C.
D.

Technically current (e.g., software)

Communicates well (both written and oral)
Advocates client's objectives
Can deal with imperfect information

32 Which of the following statements is not true?

.
A. Statistics helps refine theories through ongoing hypothesis testing.
B. Statistics is the science of collecting, organizing, analyzing,
interpreting, and presenting data.
C. Estimating parameters is an important aspect of descriptive
statistics.
D. Statistical challenges include imperfect data and practical
constraints.
33 Which is not a practical constraint facing the business researcher or
. data analyst?

A.
Time and money are always limited.
B. The world is no laboratory, so some experiments are impractical.
C. Research on human subjects is fraught with danger and ethical
issues.
D. Survey respondents usually will tell the truth if well compensated.
34 Which is not an essential characteristic of a good business data
. analyst?

A.
B.
C.
D.

Effective writer
Stays current on techniques
Has a Ph.D. or master's degree in statistics
Can deal with imperfect information

35 An ethical statistical consultant would not always:

.
A.
B.
C.
D.

follow accepted statistical procedures.

support management's desired conclusions.
acknowledge sources of financial support.
report limitations of the data.

36 The NASA experiences with the Challenger and Columbia disasters

. suggest that:

A.
B.
C.
D.

statistics is not applicable to space endeavors.

limited data may still contain important clues.
good engineers can eliminate risks in space flight.
space flight is only slightly more risky than commercial air travel.

37 Which is not a goal of the ethical data analyst?

.
A.
To be an honest broker of data
B. To learn to downplay inconvenient data
C. To understand the firm's code of ethics (or help create one)
D. To look for hidden agendas in data collection
38 Which of the following statements is not true?
.
A. A statistic is a single measure (usually numerical) that is calculated
from a sample.
B. Statistics is the science of collecting, organizing, analyzing,
interpreting, and presenting data.
C. For day-to-day data business analysis, most firms rely on a large
staff of expert statisticians.
D. A statistical test may be significant yet have no practical
importance.
39 "Smoking is not harmful. My Aunt Harriet smoked, but lived to age 90."
. This best illustrates which fallacy?

A.
B.
C.
D.

Unconscious bias
Significance versus practical importance
Post hoc reasoning
Small sample generalization

40 Which best illustrates the distinction between statistical significance

. and practical importance?

A. "In 2006, 240 out of 400 statistics students at Oxnard Technical

College sold their textbooks at the end of the semester, compared
with 220 out of 330 students in 2005, a significant decrease."
B. "Our new manufacturing technique has increased the life of the 80
GB USB AsimoDrive external hard disk significantly, from 240,000
hours to 250,000 hours."
C. "In 50,000 births, the new vaccine reduced the incidence of infant
mortality in Morrovia significantly from 14.2 deaths per 1000 births
to 10.3 deaths per 1000 births."
D. "The new Sky Penetrator IV business jet's cruising range has
increased significantly from 3,975 miles to 4,000 miles."
41 "Circulation fell in the month after the new editor took over the
. newspaper Oxnard News Herald. The new editor should be fired."
Which is not a serious fallacy in this conclusion?

A.
B.
C.
D.

Generalizing from a small sample

Applying post hoc reasoning
Failing to identify causes
Using a biased sample

42 An ethical data analyst would be least likely to:

.
A.
check data for accuracy.
B. cite his/her data sources and their limitations.
C. acknowledge sources of financial support.
D. rely on consultants for all calculations.

43 "Tom's SUV rolled over. SUVs are dangerous." This best illustrates
. which fallacy?

A.
B.
C.
D.

Unconscious bias
Significance versus practical importance
Post hoc reasoning
Small sample generalization

44 "Bob didn't wear his lucky T-shirt to class, so he failed his chemistry
. exam." This best illustrates which fallacy?

A.
B.
C.
D.

Small sample generalization

Poor survey methods
Post hoc reasoning
More than one of the above

45 Which is not a reason for an average student to study statistics?

.
A.
B.
C.
D.

Improve technical writing skills

Gain information management skills
Enhance technical literacy
Learn stock market strategies

46 Which is not a likely area of application of statistics in business?

.
A. Auditing supplier invoices for correct payment
B. Questioning the executives' strategic decisions
C. Looking for patterns in a large marketing database
D. Making forecasts of several key product lines
47 Which is not a likely task of descriptive statistics?
.
A.
B.
C.
D.

Summarizing a sample
Describing data numerically
Estimating unknown parameters
Making visual displays of data

48 We would associate the term inferential statistics with which task?

.
A.
B.
C.
D.

Making visual displays of data

Estimating unknown parameters
Describing a sample of data
Tabulating a survey

Short Answer Questions

49 How might statistics be useful in determining the correct width of
. doorways in a convalescent care facility so that 99 percent of the
"typical" wheelchairs can pass through the doorway without coming
closer than 6 inches on either side?

50 Established risk factors such as cholesterol and obesity can predict

. who will get heart disease about 80 percent of the time. Adding a new
test called CRP can raise this percentage to 81 percenta statistically
significant difference. But would this improvement be of practical
importance to a physician? To a patient? Discuss.

51 Bob said, "Since statistics cannot tell for certain whether one thing
. caused another, there is no point in even reporting probabilities."
Argue both for and against Bob's statement.

52 Bob said, "Why study math and statistics? I'm majoring in human
. resources because it's people that are important in business, not
numbers." Argue both for and against Bob's statement.

Chapter 01 Overview of Statistics Answer Key

True / False Questions

1.

Statistics is the science of collecting, organizing, analyzing,

interpreting, and presenting data.
TRUE
This is one of many good definitions of statistics.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Define statistics and explain some of its uses in business.
Topic: What Is Statistics?

2.

Inferential statistics refers to generalizing from a sample to a

population, estimating unknown parameters, drawing conclusions,
and making decisions.
TRUE
We can use statistics either to describe data or to infer something
about a population.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Define statistics and explain some of its uses in business.
Topic: Uses of Statistics

3.

Descriptive statistics refers to summarizing data rather than

generalizing about the population.
TRUE
When we do not infer, we are only describing the available sample
data.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Define statistics and explain some of its uses in business.
Topic: Uses of Statistics

4.

Estimating parameters and testing hypotheses are important

aspects of descriptive statistics.
FALSE
When we generalize to a population we are using inferential
statistics.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 01-01 Define statistics and explain some of its uses in business.
Topic: Uses of Statistics

5.

Inconsistent treatment of data by a researcher is a symptom of poor

survey or research design.
FALSE
Good survey data can still be misused or misinterpreted.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-04 List and explain common statistical pitfalls.
Topic: Critical Thinking

6.

Empirical data are collected through observations and/or

experiments.
TRUE
Empirical data are contrasted with a priori estimates (e.g., expecting
10 heads in 20 coin flips).
AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 01-04 List and explain common statistical pitfalls.
Topic: Critical Thinking

7.

Business intelligence refers to collecting, storing, accessing, and

analyzing data on the company's operations in order to make better
business decisions.
TRUE
See Wikipedia for similar definitions of business intelligence.
AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Define statistics and explain some of its uses in business.
Topic: Uses of Statistics

8.

When a statistician omits data contrary to her findings in a study,

she is justified as long as the sample supports her objective.
FALSE
We do not omit data unless it is proven to be an error.
AACSB: Ethics
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-03 State the common challenges facing business professionals using statistics.
Topic: Statistical Challenges

9.

A strong correlation between A and B would imply that B is caused

by A.
FALSE
Temporal sequence does not prove causation.
AACSB: Reflective Thinking
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 01-04 List and explain common statistical pitfalls.
Topic: Critical Thinking

10.

The post hoc fallacy says that when B follows A then B is caused by
A.
TRUE
Temporal sequence does not prove causation.
AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-04 List and explain common statistical pitfalls.
Topic: Critical Thinking

11.

A statistical test may be significant yet have no practical

importance.
TRUE
Large samples sometimes reveal tiny effects that may not matter
very much.
AACSB: Analytic
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 01-04 List and explain common statistical pitfalls.
Topic: Critical Thinking

12.

Valid statistical inferences cannot be made when sample sizes are

small.
FALSE
Small samples may be all that we have, and statistics does have
rules for them.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-03 State the common challenges facing business professionals using statistics.
Topic: Statistical Challenges

13.

Statistics is an essential part of critical thinking because it allows us

to transform the empirical evidence from a sample so it will agree
with our preferred conclusions.
FALSE
Ethical analysts challenge their beliefs with data rather than forcing
data to their beliefs.
AACSB: Ethics
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 01-03 State the common challenges facing business professionals using statistics.
Topic: Statistical Challenges

14.

Statistical challenges include imperfect data, practical constraints,

and ethical dilemmas.
TRUE
The list is longer, but these three are big challenges.
AACSB: Ethics
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 01-03 State the common challenges facing business professionals using statistics.
Topic: Statistical Challenges

15.

A business data analyst needs a PhD in statistics.

FALSE
Every business person does some statistics.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 List reasons for a business student to study statistics.
Topic: Why Study Statistics?

16.

The science of statistics tells us whether the sample evidence is

convincing.
TRUE
There are clear scientific rules for statistical inference.
AACSB: Analytic
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 01-01 Define statistics and explain some of its uses in business.
Topic: What Is Statistics?

17.

Pitfalls to consider in a statistical test include nonrandom samples,

small sample size, and lack of causal links.
TRUE
These are among many other pitfalls.
AACSB: Reflective Thinking
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-04 List and explain common statistical pitfalls.
Topic: Critical Thinking

18.

In business communication, a table of numbers is preferred to a

graph because it is more able to convey meaning.
FALSE
Although tables can show exact numbers, a good graph may be
more helpful.
AACSB: Communication
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 01-03 State the common challenges facing business professionals using statistics.
Topic: Statistical Challenges

19.

Statistical data analysis can often distinguish between real vs.

perceived ethical issues.
TRUE
Proper framing of a question may reveal that there is no real ethical
issue.
AACSB: Ethics
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 01-03 State the common challenges facing business professionals using statistics.
Topic: Statistical Challenges

20.

Excel has limited use in business because advanced statistical

software is widely available.
FALSE
Small businesses may lack advanced software (and training to use
it).
AACSB: Technology
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 01-01 Define statistics and explain some of its uses in business.
Topic: What Is Statistics?

21.

Statistics helps surmount language barriers to solve problems in

multinational businesses.
TRUE
Statistics is part of the international language of science.
AACSB: Diversity
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 List reasons for a business student to study statistics.
Topic: Why Study Statistics?

22.

Statistics can help you handle either too little or too much
information.
TRUE
Statistical tasks include reducing lots of data or finding meaning in
large piles of data.
AACSB: Technology
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 List reasons for a business student to study statistics.
Topic: Why Study Statistics?

23.

Predicting a presidential candidate's percent of the statewide vote

from a sample of 800 voters would be an example of inferential
statistics.
TRUE
Generalizing from a sample is an inference.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-01 Define statistics and explain some of its uses in business.
Topic: Uses of Statistics

24.

Surveying electric vehicle owners would provide a representative

random sample of Americans' views on global warming policies.
FALSE
Not a random sample of all drivers.
AACSB: Reflective Thinking
Blooms: Apply
Difficulty: 1 Easy
Learning Objective: 01-04 List and explain common statistical pitfalls.
Topic: Critical Thinking

25.

An example of descriptive statistics would be reporting the percent

of students in your accounting class that attended the review session
for the last exam.
TRUE
As long as you don't generalize it is a descriptive statistic.
AACSB: Analytic
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 01-01 Define statistics and explain some of its uses in business.
Topic: Uses of Statistics

Multiple Choice Questions

26.

"Bob must be rich. He's a lawyer, and lawyers make lots of money."
This statement best illustrates which fallacy?

A.
Using poor survey methods
B. Confusing significance with importance
C.
Unconscious bias
D. Generalizing from an average to an individual
Many lawyers do not work for big firms (remember My Cousin
Vinnie?).
AACSB: Reflective Thinking
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 01-04 List and explain common statistical pitfalls.
Topic: Critical Thinking

27.

Which is not an ethical obligation of a statistician? Explain.

A. To know and follow accepted procedures

B. To ensure data integrity and accurate calculations
C. To support client wishes in drawing conclusions from the data
D. To acknowledge sources of financial support
Review the list of ethical responsibilities.
AACSB: Ethics
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 01-03 State the common challenges facing business professionals using statistics.
Topic: Statistical Challenges

28.

Which of the following statements is correct?

A. A parameter is a measure that is calculated from a sample.

B. Statistics is the science of collecting, organizing, analyzing,
interpreting, and presenting data.
C. For day-to-day data business analysis, most firms rely on a large
staff of expert statisticians.
D. A statistical test result that is significant also has practical
importance.
Check you definitions and uses of statistics.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 01-01 Define statistics and explain some of its uses in business.
Topic: What Is Statistics?

29.

Which is least likely to be an application where statistics will be

useful?

A. Predicting whether an airfare is likely to rise or fall

B. Designing the most desirable features for a ski pass
C. Deciding whether offering Rice Krispies improves restaurant sales
D. Choosing the wording of a corporate policy prohibiting smoking
Policy wording is probably up to writers.
AACSB: Analytic
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 01-02 List reasons for a business student to study statistics.
Topic: Uses of Statistics

30.

Because 25 percent of the students in my morning statistics class

watch eight or more hours of television a week, I conclude that 25
percent of all students at the university watch eight or more hours of
television a week. The most important logical weakness of this
conclusion would be:

A.
B.
C.
D.

relying on any sample instead of surveying every student.

using a sample that may not be representative of all students.
failing to correct for unconscious interviewer bias.
assuming cause and effect where none exists.

Generalizing from a nonrandom sample is risky.

AACSB: Reflective Thinking
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 01-04 List and explain common statistical pitfalls.
Topic: Critical Thinking

31.

Which of the following is not a characteristic of an ideal statistician?

A.
B.
C.
D.

Technically current (e.g., software)

Communicates well (both written and oral)
Advocates client's objectives
Can deal with imperfect information

There is an unattractive name for a consultant who always agrees

with the client.
AACSB: Ethics
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-03 State the common challenges facing business professionals using statistics.
Topic: Statistical Challenges

32.

Which of the following statements is not true?

A. Statistics helps refine theories through ongoing hypothesis

testing.
B. Statistics is the science of collecting, organizing, analyzing,
interpreting, and presenting data.
C. Estimating parameters is an important aspect of descriptive
statistics.
D. Statistical challenges include imperfect data and practical
constraints.
Estimating a population parameter is an inference.
AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 01-01 Define statistics and explain some of its uses in business.
Topic: Uses of Statistics

33.

Which is not a practical constraint facing the business researcher or

data analyst?

A.
Time and money are always limited.
B. The world is no laboratory, so some experiments are impractical.
C. Research on human subjects is fraught with danger and ethical
issues.
D. Survey respondents usually will tell the truth if well compensated.
Paid respondents may try to tell you what you want to hear.
AACSB: Ethics
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-03 State the common challenges facing business professionals using statistics.
Topic: Statistical Challenges

34.

Which is not an essential characteristic of a good business data

analyst?

A.
B.
C.
D.

Effective writer
Stays current on techniques
Has a Ph.D. or master's degree in statistics
Can deal with imperfect information

No advanced degree is needed for basic statistics, which is why all

business students study it.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-03 State the common challenges facing business professionals using statistics.
Topic: Statistical Challenges

35.

An ethical statistical consultant would not always:

A.
B.
C.
D.

follow accepted statistical procedures.

support management's desired conclusions.
acknowledge sources of financial support.
report limitations of the data.

There is a nasty name for a consultant who always agrees with

management.
AACSB: Ethics
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 01-03 State the common challenges facing business professionals using statistics.
Topic: Statistical Challenges

36.

The NASA experiences with the Challenger and Columbia disasters

suggest that:

A.
B.
C.
D.

statistics is not applicable to space endeavors.

limited data may still contain important clues.
good engineers can eliminate risks in space flight.
space flight is only slightly more risky than commercial air travel.

When small samples are all that we have, we must study them
carefully.
AACSB: Reflective Thinking
Blooms: Apply
Difficulty: 1 Easy
Learning Objective: 01-01 Define statistics and explain some of its uses in business.
Topic: Uses of Statistics

37.

Which is not a goal of the ethical data analyst?

A.
To be an honest broker of data
B. To learn to downplay inconvenient data
C. To understand the firm's code of ethics (or help create one)
D. To look for hidden agendas in data collection
We do not ignore data unless it is an actual error.
AACSB: Ethics
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 01-03 State the common challenges facing business professionals using statistics.
Topic: Statistical Challenges

38.

Which of the following statements is not true?

A. A statistic is a single measure (usually numerical) that is

calculated from a sample.
B. Statistics is the science of collecting, organizing, analyzing,
interpreting, and presenting data.
C. For day-to-day data business analysis, most firms rely on a large
staff of expert statisticians.
D. A statistical test may be significant yet have no practical
importance.
Few firms have staffs of statistics experts, so all of us need to know
the basics.
AACSB: Analytic
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-01 Define statistics and explain some of its uses in business.
Topic: Uses of Statistics

39.

"Smoking is not harmful. My Aunt Harriet smoked, but lived to age

90." This best illustrates which fallacy?

A.
B.
C.
D.

Unconscious bias
Significance versus practical importance
Post hoc reasoning
Small sample generalization

Individual cases sometimes violate causation.

AACSB: Reflective Thinking
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 01-04 List and explain common statistical pitfalls.
Topic: Critical Thinking

40.

Which best illustrates the distinction between statistical significance

and practical importance?

A. "In 2006, 240 out of 400 statistics students at Oxnard Technical

College sold their textbooks at the end of the semester, compared
with 220 out of 330 students in 2005, a significant decrease."
B. "Our new manufacturing technique has increased the life of the 80
GB USB AsimoDrive external hard disk significantly, from 240,000
hours to 250,000 hours."
C. "In 50,000 births, the new vaccine reduced the incidence of infant
mortality in Morrovia significantly from 14.2 deaths per 1000
births to 10.3 deaths per 1000 births."
D. "The new Sky Penetrator IV business jet's cruising range has
increased significantly from 3,975 miles to 4,000 miles."
Consumers would not notice because 240,000 hours is 27 years.
AACSB: Reflective Thinking
Blooms: Evaluate
Difficulty: 3 Hard
Learning Objective: 01-04 List and explain common statistical pitfalls.
Topic: Critical Thinking

41.

"Circulation fell in the month after the new editor took over the
newspaper Oxnard News Herald. The new editor should be fired."
Which is not a serious fallacy in this conclusion?

A.
B.
C.
D.

Generalizing from a small sample

Applying post hoc reasoning
Failing to identify causes
Using a biased sample

There is no real sample, just shaky logical inferences.

AACSB: Reflective Thinking
Blooms: Evaluate
Difficulty: 2 Medium
Learning Objective: 01-04 List and explain common statistical pitfalls.
Topic: Critical Thinking

42.

An ethical data analyst would be least likely to:

A.
check data for accuracy.
B. cite his/her data sources and their limitations.
C. acknowledge sources of financial support.
D. rely on consultants for all calculations.
When you farm out your calculations, you have lost control of your
work.
AACSB: Ethics
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 01-03 State the common challenges facing business professionals using statistics.
Topic: Statistical Challenges

43.

"Tom's SUV rolled over. SUVs are dangerous." This best illustrates
which fallacy?

A.
B.
C.
D.

Unconscious bias
Significance versus practical importance
Post hoc reasoning
Small sample generalization

One instance proves little.

AACSB: Reflective Thinking
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 01-04 List and explain common statistical pitfalls.
Topic: Critical Thinking

44.

"Bob didn't wear his lucky T-shirt to class, so he failed his chemistry
exam." This best illustrates which fallacy?

A.
B.
C.
D.

Small sample generalization

Poor survey methods
Post hoc reasoning
More than one of the above

There is no credible causal link between these two events.

AACSB: Reflective Thinking
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 01-04 List and explain common statistical pitfalls.
Topic: Critical Thinking

45.

Which is not a reason for an average student to study statistics?

A.
B.
C.
D.

Improve technical writing skills

Gain information management skills
Enhance technical literacy
Learn stock market strategies

To learn about the stock market, you should probably study finance.
AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 List reasons for a business student to study statistics.
Topic: Why Study Statistics?

46.

Which is not a likely area of application of statistics in business?

A.
B.
C.
D.

Auditing supplier invoices for correct payment

Questioning the executives' strategic decisions
Looking for patterns in a large marketing database
Making forecasts of several key product lines

Business strategy may involve some statistics but not like the others
listed here.
AACSB: Analytic
Blooms: Understand
Difficulty: 1 Easy
Learning Objective: 01-02 List reasons for a business student to study statistics.
Topic: Uses of Statistics

47.

Which is not a likely task of descriptive statistics?

A.
B.
C.
D.

Summarizing a sample
Describing data numerically
Estimating unknown parameters
Making visual displays of data

Estimating a population parameter is an inference.

AACSB: Analytic
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 01-01 Define statistics and explain some of its uses in business.
Topic: Uses of Statistics

48.

We would associate the term inferential statistics with which task?

A.
B.
C.
D.

Making visual displays of data

Estimating unknown parameters
Describing a sample of data
Tabulating a survey

Estimating a population parameter is an inference.

AACSB: Analytic
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Define statistics and explain some of its uses in business.
Topic: Uses of Statistics

Short Answer Questions

49.

How might statistics be useful in determining the correct width of

doorways in a convalescent care facility so that 99 percent of the
"typical" wheelchairs can pass through the doorway without coming
closer than 6 inches on either side?

Large samples could be taken of wheelchair widths and the space

needed on either side, and averages and the 99th percentile could be
computed for widths of major brands of old and new wheelchairs,
along with the proportion of each type of wheelchair in use.
Feedback: Large samples could be taken of wheelchair widths and
the space needed on either side, and averages could be computed.
Statistics can then be applied to find the 99th percentiles. One way is
to measure the widths of major brands of wheelchairs currently
being sold, being sure that people are sitting in them and using their
hands to move the wheels to measure the necessary clearance.
Then take a similar survey of older wheelchairs that still are used.
Estimate the proportion of each type of wheelchair in use, to
determine what width is required for 99 percent to meet the
requirement. You might also find that some wheelchair users carry a
cane in their laps, which may protrude. To learn how to estimate
percentiles, you need a basic class in statistics.
AACSB: Reflective Thinking
Blooms: Create
Difficulty: 3 Hard
Learning Objective: 01-01 Define statistics and explain some of its uses in business.
Topic: Uses of Statistics

50.

Established risk factors such as cholesterol and obesity can predict

who will get heart disease about 80 percent of the time. Adding a
new test called CRP can raise this percentage to 81 percenta
statistically significant difference. But would this improvement be of
practical importance to a physician? To a patient? Discuss.

In tests involving millions of patients, even a slightly improved test

might benefit many individuals, though to the individual patient or
physician the benefit might not be apparent.
Feedback: A single physician might feel that such a small
improvement in medical diagnostics might not help very much in
predicting a particular patient's chances of getting heart disease.
However, in tests involving millions of patients, even a slightly
improved test might benefit many individuals. It is a question of
perspective (micro versus macro). Also, as medical tests improve,
the potential incremental gains become smaller.
AACSB: Reflective Thinking
Blooms: Evaluate
Difficulty: 3 Hard
Learning Objective: 01-04 List and explain common statistical pitfalls.
Topic: Critical Thinking

51.

Bob said, "Since statistics cannot tell for certain whether one thing
caused another, there is no point in even reporting probabilities."
Argue both for and against Bob's statement.

We usually cannot prove cause and effect using statistics alone, but
correlations between events can point researchers in a certain
direction and statistics is a guide to action when there is a logical
reason to suppose that cause and effect may exist, even if science
hasn't yet proven the case fully.
Feedback: Bob is correct in saying that we usually cannot prove
cause and effect using statistics alone. But probabilities and
correlations between events can point researchers in a certain
direction. And many people do accept that statistics is a guide to
action, if there is some logical reason to suppose that cause and
effect may exist, even if science hasn't yet proven the case fully.
Think how many people purchase health food and vitamin
supplements, or seek holistic treatments for various diseases.
AACSB: Reflective Thinking
Blooms: Evaluate
Difficulty: 2 Medium
Learning Objective: 01-04 List and explain common statistical pitfalls.
Topic: Critical Thinking

52.

Bob said, "Why study math and statistics? I'm majoring in human
resources because it's people that are important in business, not
numbers." Argue both for and against Bob's statement.

Bob is correct in that organizations consist of people whose decisions

determine the company's financial well-being and future, but all
organizations (including HR specialists) rely on statistics and data to
keep track of their operations, assets (human and financial), and
financial progress.
Feedback: Bob is correct in that organizations consist of people, and
their interactions and decisions determine the company's financial
well-being and future. However, he is missing something essential.
All organizations rely on statistics and data to keep track of their
operations and financial progress. Without statistics and math, no
company can exist. And human resources professionals use data just
as much as any other business specialty. In fact, many statistical
techniques were developed by psychologists in order to help
understand humans and their interactions.
AACSB: Reflective Thinking
Blooms: Evaluate
Difficulty: 2 Medium
Learning Objective: 01-01 Define statistics and explain some of its uses in business.
Topic: Uses of Statistics