Series 3 Examination 2011

BUSINESS STATISTICS
Level 3
Wednesday 1 June
Subject Code: 3009

Time allowed: 3 hours

INSTRUCTIONS FOR CANDIDATES

Answer 5 questions.

All questions carry equal marks.

There is a list of formulae at the end of the paper.

Graph paper is provided within the answer book.

Write your answers in blue or black ink/ballpoint. Pencil may be used only for graphs, charts,
diagrams, etc.

All answers must be correctly numbered but need not be in numerical order.

Workings must be shown.

Make sure your answers are accurate and neat.

You may use a calculator provided the calculator gives no printout, has no word display
facilities, is silent and cordless. The provision of batteries and their condition is your
responsibility.

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Page 1 of 9

ASE 3009 3 11 1

QUESTION 1
(a)

Give a business example for a pair of variables you would expect to be

(i)
(ii)

positively correlated
negatively correlated.
(4 marks)

A random sample of the claims made by manufacturers of dishwashers showed the following
relationship between electricity usage and amount of water consumed for each standard wash.
Machine
A

Electricity usage
(kilowatt hours)

1.2

1.1

1.5

1.6

1.2

1.4

1.6

1.8

1.0

1.7

Water
consumption
(litres)

1.5

1.6

1.7

1.8

1.5

1.8

2.0

1.8

1.1

1.7

(b)

Calculate the correlation coefficient between electricity use and water consumption, and
interpret your answer.
(10 marks)

(c)

Test whether the correlation coefficient differs significantly from zero.

(6 marks)
(Total 20 marks)

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ASE 3009 3 11 1

QUESTION 2
(a)

Explain what is meant by, and give a business example of

(i)
(ii)

independent events
mutually exclusive events.
(4 marks)

The producer of a high speed motorcycle, in an attempt to improve rider safety, manufactures the
motorcycle with a dual braking system. The probability is 0.05 of either of the two systems failing
within five years of a motorcycle being bought.
System failures occur independently of each other.
(b)

Find the probability that within five years of the purchase of a motorcycle
(i)
(ii)
(iii)

neither system fails

one system only fails
both systems fail.
(7 marks)

The motorcycle has an engine designed to have petrol consumption with a mean of 10 kilometres per
litre and a standard deviation of 2 kilometres per litre when a motorcycle is travelling at a speed of 80
kilometres per hour. Assume that petrol consumption is normally distributed.
(c)

What proportion of motorcycles travelling at this speed will have petrol consumption of
(i)
(ii)
(iii)

more than 13 kilometres per litre

less than 8 kilometres per litre
between 9 kilometres and 12 kilometres per litre?
(9 marks)
(Total 20 marks)

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Page 3 of 9

ASE 3009 3 11 1

QUESTION 3
The primary source of business information for a random sample of business executives from three
continents showed the following results.
Source
Specialist
research

Financial
newspapers

Specialist web
sites

Television

Europe

47

56

61

36

Asia

59

72

37

32

North America

44

52

52

52

A business executive is chosen at random, from the sample.

(a)

What is the probability that the executive used financial newspapers as the primary source of
business information?
(2 marks)

(b)

Given that financial newspapers were the primary source of business information for one
executive, what is the probability that the executive is North American?
(2 marks)

(c)

Test whether there is any association between the primary source of information and the
continent the business executive came from.
(12 marks)

When comparing a previous survey of primary source of business information for business executives
from Asia with the current situation the chi-square value equals 6.56.
(d)

State the null and alternative hypotheses and explain whether the pattern shown in the previous
survey varies from the current situation.
(4 marks)
(Total 20 marks)

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ASE 3009 3 11 1

QUESTION 4
(a)

Distinguish between the circumstances in which a paired t test is used in preference to a

two-sample independent t test.
(4 marks)

An initial random sample of telesales workers in a call centre showed the time a call took to answer
before training. A second random sample of telesales workers was taken, and the time to answer a
call after training was also recorded.

Time before training

(seconds)

130

140

160

120

150

200

180

130

210

Time after training

(seconds)

130

130

140

130

140

190

200

110

200

(b)

Test whether the training has reduced the average time a call took to answer.
(12 marks)

(c)

(i)

Explain what is meant by a type 2 error.

(ii)

Using your answer in part (b), may a type 2 error have occurred? Justify your answer.
(4 marks)
(Total 20 marks)

QUESTION 5
(a)

Explain what is meant by the standard error of a proportion.

(4 marks)

A company compared the number of clerical errors before and after it had reduced its staffing levels. A
random sample of 400 documents before the cuts in staffing levels took place showed 36 errors. After
the staffing reductions a random sample of 500 documents showed 50 errors.
(b)

Test whether the proportion of errors made has changed following the staffing reductions.
(12 marks)

(c)

Explain why an increase in the number of errors may have an impact on the business
irrespective of whether the null hypothesis in part (b) is or is not rejected.
(4 marks)
(Total 20 marks)

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ASE 3009 3 11 1

QUESTION 6
(a)

Explain the meaning of the mode, median and arithmetic mean and give a business example
when each of them might be used.
(6 marks)

Information about the number of bottles of a popular beverage bought per week was obtained from a
random sample of purchasers.
Bottles bought per
week

Number of purchasers

50

1 -4

120

5-9

160

10 - 14

210

15 - 19

140

20 - 24

80

25 - 39

50

(b)

Calculate the arithmetic mean and standard deviation of the number of bottles bought per week.
(8 marks)

(c)

Using your answers from part (b) calculate the coefficient of variation.
(2 marks)

(d)

Estimate the 95% confidence interval for the mean number of bottles bought.
(4 marks)
(Total 20 marks)

QUESTION 7
A new company wishes to carry out a market research survey before it starts operating. You have
been asked to explain some of the terms the owner has heard about.
(a)

Explain the meaning of the following terms and give one advantage and one disadvantage of
each to the business.
(i)
(ii)
(iii)
(iv)

Simple random sample

Quota sample
Telephone interview
On line survey.
(16 marks)

A similar company has published data which shows 45% of the population would buy the product the
new company sells.
(b)

What sample size is required to be 90% certain of being within 2% of the true percentage who
would buy the product?
(4 marks)
(Total 20 marks)

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Page 6 of 9

ASE 3009 3 11 1

QUESTION 8
(a)

Why are weighted index numbers constructed? Give one advantage and one disadvantage of a
base year weighted index number compared to a current year weighted index number.
(6 marks)

The table below shows the quarterly Retail Price Index (RPI) data (1987 Q1 = 100)
2006

2007

2008

2009

2010

Quarter 1

194.2

203.0

211.1

210.9

219.3

197.6

206.3

215.3

212.6

223.5

199.3

207.1

217.4

214.4

201.4

209.8

215.5

216.9

(Source www.statistics.gov.uk Sept 2010)

(b)

Explain what is meant when an index number states 1987 Q1 = 100

(2 marks)

(c)

Rebase the 2009 and 2010 values of the index with the first quarter of 2006 as the base
period = 100
(3 marks)

(d)

By what percentage did retail prices increase between the first quarter of 2006 and the
second quarter of 2010?
(3 marks)

An investment made at the end of the fourth quarter 2006 was worth 9,874 at the end of the
second quarter of 2010.
(e)

Using the table of data above, how much is the investment worth in the second quarter of 2010
when the effects of inflation, measured by the Retail Price Index (RPI), are removed?
(3 marks)

(f)

Using the table of data above, what percentage increase is required in a pension to maintain its
buying power between the first quarter of 2009 and the second quarter of 2010.
(3 marks)
(Total 20 marks)

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ASE 3009 3 11 1

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ASE 3009 3 11 1

LEVEL 3

3009/3/11

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