Business Statistics MCQ Exam Solutions

Sample Exam Solutions

Problem 1 (Hypothesis testing)
A company that manufactures travel goods is particularly concerned that the mean weight of the roll-on cabin bags should not exceed 3 kg as many airlines limit the weight of carry-on luggage on their planes to 7 kg. Past experience allows the assumption that the std. dev = 0.03 kg. A sample of 50 cabin bags is selected and the sample mean is 3.009 kg. Using a 0.05 significance, conduct a hypothesis test to determine if the population mean weight of the cabin bags is greater than 3kg?

What is the null and alternative hypothesis for this test? A H0: µ ≥ 3, H1: µ < 3
B H0: µ ≤ 3, H1: µ > 3
C H0: µ = 3, H1: µ ≠ 3
D H0: µ ≠ 3, H1: µ = 3
E None of the above
Ans: B

What is (are) the critical value(s)? A -1.96 and 1.96
B -1.645
C -1.645 and 1.645
D 1.645
E None of the above
Ans: D What is the calculated test statistic?
A 2.12
B 1.43
C 1.78
D 1.23
E None of the above Ans: A

What is your conclusion? (choose the most correct answer)
A Reject Ho at the 5% level of significance.
B Accept Ho at the 5% level of significance.
C Not sure.
D None of the above.
E Need more information.
Ans: A

Calculate the p-value
A P value = 0.017
B P value = 0.09
C P value = 0.05
D Not sure
E None of the above.
Ans: A

Interpret the meaning of the p-value
A The probability of observing a test statistic more extreme than the observed sample value given the null hypothesis is true.
B The observed level of significance.
C The smallest value of α for which H0 can be rejected.
D All of the above
E None of the above
Ans: D

Problem 2 (Multiple Regression):
A developer who specialises in holiday cottage properties is considering purchasing a large tract of land adjoining a lake. The current owner of the tract has already subdivided the land into separate building lots and has prepared the lots by removing some of the trees. The developer wants to forecast the value of each