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STAT 220 CRN 10747 (Mens) In Class Group Assignment (ICGA) #2 Solution

Thursday, October 07, 2010 (20 points)


Student information (P PRINT): First Name (FN), Last Name (LN) and ID
FN:________________________ LN:___________________
ID: _________________________
FN:________________________ LN:___________________

ID: _________________________

FN:________________________ LN:___________________

ID: _________________________

FN:________________________ LN:___________________

ID: _________________________

1. Consider the accompanying contingency table, which presents the results of an advertising survey about
the use of credit by Martin Oil Company customers.

Preferred
Method of
Payment
Cash
OilCompany
Card
National
or Bank
Credit
Card
Total

Number of Purchases at Gasoline Station Last Year


0-4
5-9
10-14
15-19
20 and
over

Total

150
50

100
35

25
115

0
80

0
70

275
350

50

60

65

45

225

250

195

205

125

75

850

a.

How many customers were surveyed?


850

b.

Why are these bivariate data? What type of variable is each one?

Two variables, number of purchases and method of payment, are paired together.
Method of payment is qualitative; number of purchases is quantitative.
c.

How many customers preferred to use an oil-company credit card?

350

d.

How many customers made 20 or more purchases last year?

75

e.

How many customers preferred to use an oil-company credit card and made between five and nine
purchases last year?

35

f.

What does the 80 in the fourth cell in the second data row mean?

80 people made between 15 and 19 purchases and preferred to


use an oil company credit card.

2. A professor of economics wants to study the relationship between income and education. A

sample of 10 individuals is selected at random, and their income (in thousands of dollars) and
education (in years) are shown below:
Education
Income
a.
b.

12
25

14
31

10
20

11
24

13
28

8
15

10
21

15
35

13
29

12
27

Draw a scatter diagram for these data with the income on the vertical axis.
Describe the relationship between income and education.

ANS:
a.

b.

There is a very strong positive linear relationship between education and income; as years
of education increase, income also increases in a linear manner.

3. Multiple Choice.

3A. When two variables tend to move in opposite directions, yet still form a linear pattern, how do you
describe their relationship?
a. A positive linear relationship.
b. A negative linear relationship.
c. A proportional inverse relationship.
d. None of these choices.
3B. Which of the following statements is true for the following observations: 7, 5, 6, 4, 7, 8, and 12?
a. The mean, median and mode are all equal.
b. Only the mean and median are equal.
c. Only the mean and mode are equal
d. Only the median and mode are equal.
3C. Which of the following represents time-series data?
a. The length of time each of the top 100 stocks have been available on the NASDAQ.
b. The most popular time of year that people purchase the top 100 stocks on the NASDAQ.
c. The value of the #1 stock on the NASDAQ each month over a one-year period.
d. All of these choices are true.
4. How do the mean, median and mode compare to each other when the distribution is:

a.
b.
c.

symmetric?
negatively skewed?
positively skewed?

ANS:
a.
b.
c.

mean = median = mode


mean < median < mode
mean > median > mode

5. An investment you made in the years 2000-2003 has the following rates of return shown below:

Year
Rate of Return

2000
.50

2001
.30

2002
.10

2003
.15

Compute the geometric mean.


ANS:

6. Suppose that a firm's sales were $3,750,000 five years ago and are $5,250,000 today. What was the
geometric mean growth rate in sales over the past five years?
ANS:
If Rg is the geometric mean, then
3,750,000 (1 + Rg)5 = 5,250,000 Rg = 0.0696 or 6.96%