Business Statistics

Mathematical Sciences Department STA-214 – Test 3

BAF, BCTM, BCME, BAC, BAM, BAU & Date: October 7, 2022
BBA (Year 2: Generic & Weekend) Time Allowed: 1.5 hours
Instruction: Attempt all items

1) A statement about a population developed for the purpose of testing is called the
a) hypothesis c) critical value
b) level of significance d) test-statistic (1 mark)

2) A statement about a specific value of a population parameter is called the

a) null hypothesis c) alternative hypothesis
b) parametric hypothesis d) unbiased estimate (1 mark)

3) The probability of rejecting the null hypothesis when it is true is called the
a) level of confidence c) level of significance
b) power of the test d) type I error (1 mark)

4) The choice of one-tailed test or two-tailed test depends upon the

a) null hypothesis c) alternative hypothesis
b) p-value d) level of significance,  (1 mark)

5) Test of hypothesis H0 :   50 against H1 :   50 leads to

a) left-tailed test c) right-tailed test
b) two-tailed test d) rejection test (1 mark)

6) Test of hypothesis H0 : p  .20 against H1 : p  .20 involves a

a) right one-sided test c) left one-sided test
b) two-sided test d) mean test (1 mark)

7) Test of hypothesis H0 :   0 against H1 :   0 leads to

a) two-tailed test c) left-tailed test
b) right-tailed test d) no test (1 mark)

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8) A formula or value that provides a basis for testing a null hypothesis is called a
a) test-statistic c) population statistic
b) population parameter d) standard value (1 mark)

9) The range of test statistic Z is

a) 0 to 1 c) 1 to +1
b) 0 to ∞ d)  to + (1 mark)

10) The range of test statistic t is

a) 0 to 1 c) 1 to +1
b) 0 to ∞ d)  to + (1 mark)

11) A failing student passed by an examiner is an example of

a) Type-I error c) Type-II error
b) Unbiased decision d) Unbiased estimate (1 mark)

12) In a 1-tailed test using z-test statistic and   0.01 , the critical value is either
a) -1.96 or +1.96 c) -2.58 or +2.58
b) -1.65 or +1.65 d) None of these is correct (2 marks)

13) A type II error is committed when

a) a false H 0 is accepted c) a true H1 is accepted

b) a true H 0 is rejected d) both H 0 and H1 are accepted (1 mark)

14) The test statistic Z  1.8 was calculated in a 1-tailed test. At 0.01 (i.e.   1% )
level of significance, this indicates that
a) H 0 should not be rejected c)   0.05 should have been used

b) H 0 should be rejected d) should have used a 2-tailed test (2 marks)

15) What is the correct decision to make if a t-statistic is in the critical region?
a) Reject H 0 c) Fail to reject H 0

b) Reject H1 d) Fail to reject H1 (1 mark)

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16) Suppose you want to carry out a hypothesis test to confirm whether two population
means are the same. Then the null and alternative hypotheses would be stated as
a) H 0 : 1  2 c) H 0 : 1   2
H1 : 1  2 H1 : 1   2

b) H 0 : 1   2 d) H 0 : 1   2 (2 marks)
H1 : 1   2 H1 : 1   2

17) If a student sets a level of significance,   0.05 (i.e. 5%), what does this mean?
a) 5-times out of 100, a significant result will be found that is due to chance alone.
b) 95-times out of 100, a significant result will be found that is due to chance alone.
c) 5-times out of 100, a significant result will be found that is not due to chance, but
to true relationship.
d) None of the above. (2 marks)

18) Suppose you wanted to apply a one-tailed test as opposed to a two-tailed test with
  .284 . How would you covert the level of significance to one-tailed?
a) .284  2  .142 c) .284  0.05  5.68

b) .284  2  .568 d) .284  0.05  .0142 (2 mark)

19) A student reported the result of a t-test as t  5.2 and p  value  0.05 . Which of the
following is a correct interpretation of this result?

a) H 0 was not rejected and the probability of a Type I error is less than .05.

b) H 0 was not rejected and the probability of a Type II error is less than .05.

c) H 0 was rejected and the probability of a Type I error is less than .05.

d) H 0 was rejected and the probability of a Type II error is less than .05. (2 marks)

For questions/items 20, 21 & 22

Suppose that you want to test the claim made by an auditor that she is able to complete an
inventory audit in less than an hour. For a random sample of 24 inventories, the auditor
averages 63.2 minutes with a standard deviation of 7.7 minutes.

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20) What is the test statistic for this test?
a) Z = 2.04 c) t = 2.04
b) t = 1.79 d) Z = 1.79 (2 marks)

21) What are the appropriate null and alternative hypotheses?

a) H0 :   60 and H1 :   60 c) H0 :   0 and H1 :   0

b) H0 :   60 and H1 :   60 d) H0 :   60 and H1 :   60 (2 marks)

22) What is the most accurate estimate of the p-value?

a) p  0.05 c) p  0.025

b) p  0.10 d) p  0.01 (2 marks)

23) Which of the following is a correct statement (in the context of hypothesis tests)?
a) The Power of a test increases as the Type II error probability does.
b) It is not possible to decrease probability of both Type I and Type II errors at the
same time.
c) The significance level is always equal to the probability of Type II error.
d) A test is significant if it fails to reject the null hypothesis. (2 marks)

24) In a hypothesis test, a researcher rejects the null hypothesis at   0.05 . Which of the
following conclusions necessarily follows?
a) The null hypothesis would have been rejected at 1% level of significance.
b) The p-value of the test was less than 3%
c) The researcher performed a two-tailed test with 10% significance level.
d) The p-value of the test was less than 10% (2 marks)

For questions/items 25, 26, 27, 28, 29 & 30

Of a random sample of 75 private primary schools (PPS), 50 reported an increase in profit
last year. Of a second random sample of 75 private secondary schools (PSS), 44 reported
an increase in profit in the same period. You want to test the hypothesis that proportion of
PPS reporting an increase in profit is not different from that of the PSS.

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25) The alternative hypothesis H1 for the test to be performed is

a) H1 : pPPS  pPSS  0 c) H1 : pPPS  pPSS  0

b) H1 : pPPS  pPSS  0 d) H1 : pPPS  pPSS (1 mark)

26) What is the relevant critical value(s) at the 10% level of significance?
a) ± 1.96 c) ± 1.65
b) + 1.28 d) − 1.28 (2 marks)

27) An estimate of the common (pooled) proportion is

a) 0.750 c) 0.627
b) 0.440 d) 0.556 (2 marks)

28) Which of the following is the correct value of the z-statistic?

a) 1.82 c) 1.52
b) 1.02 d) 1.01 (2 marks)

29) What conclusion should you draw at 10% significance level?

a) Fail to reject the null hypothesis and conclude that there is a significant difference
in the two proportions.
b) Reject the null hypothesis and conclude that there is a significant difference in
the two proportions.
c) Fail to reject the null hypothesis and conclude that there is no evidence of
significant difference in the two proportions.
d) Reject the null hypothesis and conclude that PPS proportion is significantly
greater than that of PSS. (1 mark)

30) What type of error is likely to have been committed in making the decision you have
made in item 29?
a) Type I c) Type II
b) Standard error d) No error was committed (2 marks)

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31) A statistics student wants to test that the average amount of money (K’000) a typical
college student spends per month during a semester is K70. Based upon previous
research, she found that the population distribution is normal with a standard
deviation of K17.32. The student surveys 35 students and finds that the mean
spending is K72.43. Which of the following statements is most accurate?
a) Fail to reject the null hypothesis at   0.10 (5 marks)

b) Reject the null hypothesis at   0.10

c) Reject the null hypothesis at   0.05

d) Reject the null hypothesis at   0.00

End of Paper

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