Chapter 1
Overview of Statistics 1.1 a. Statistics can be used to 1) determine what a typical commission is and then 2) use that
value to identify commissions that appear to be unusually high.
b. She could use statistics to show the average energy use compared to previous models.
She could also use statistics to show how durable the monitor would be in the field.
c. He could use statistics to calculate the average absenteeism at each plant and then
compare across the three plants.
Learning Objective: 01-1 1.2 a. He could calculate the job turnover for each gender for each restaurant. He could then
look at the difference between the various restaurants as well as the difference between
genders.
b. He could calculate the average number of emails received and sent for employees in
different job classifications and make comparisons.
c. The portfolio manager could calculate both the average return and the variation on return
for the six different investments and make comparisons.
Learning Objective: 01-1 1.3 a. The average business school graduate should expect to use computers to manipulate the
data.
b. Answers will vary. Weak quantitative skills lead to poor decision making because data-
based decision making is a hallmark of successful businesses. If one cannot analyze
data or understand summary analyses, one will be making decisions without full information. Learning Objective: 01-2 1.4 a. Answers will vary. Why Not Study: It is difficult to become a statistical “expert” after
taking one introductory college course. A business person should hire statistical experts
and have faith that those who are using statistics are doing it correctly. Why Study: In fact, most college graduates will use statistics every day. Relying on a consultant to perform simple or even complex statistical analyses means turning over part of the business decision-making to someone who doesn’t know your business as well as you do. b. Answers will vary. Answers provided in part a will be similar for the subjects of
accounting. Foreign languages are essential in this global business environment of
today. While learning a foreign language can take considerably more time as an adult, the investment is worth it. Businesses are looking for college graduates that have quantitative skills and speak a foreign language. Chinese and Spanish are popular choices.
c. To arrive at an absurd result, and then conclude the original assumption must have been
wrong, since it gave us this absurd result. This is also known as proof by contradiction.
1
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McGraw Hill LLC.Applied Statistics in Business and Economics 7e David Doane, Lori Seward (Solutions Manual All Chapters, 100% Original Verified, A+ Grade) All Chapters Solutions Manual Supplement files download link at the end of this file. It makes use of the law of excluded middle — a statement which cannot be false, must then be true. If you state that you will never use statistics in your business profession then you might conclude that you shouldn’t study statistics. However, the original assumption of never using statistics is wrong; therefore the conclusion of not needing to
study statistics is also wrong.
Learning Objective: 01-2 1.5 a. Answers will vary.
b. An hour with an expert at the beginning of a project could be the smartest move a
manager can make. A consultant is helpful when your team lacks certain critical skills,
or when an unbiased or informed view cannot be found inside your organization. Expert consultants can handle domineering or indecisive team members, personality clashes, fears about adverse findings, and local politics. As in any business decision, the
costs of paying for statistical assistance must be weighed against the benefits. Costs are: statistician’s time, more time invested in the beginning of a project which may mean results are not immediate. Benefits include: better sampling strategies which can result in more useful data, a better understanding of what information can be extracted from the data, greater confidence in the results.
Learning Objective: 01-2 1.6 a. The ethical issue is that credit card companies are using unfair marketing practices to
entice students to use credit cards. Students are a vulnerable group that has not been
educated about personal finance. Credit card companies are also purchasing student
lists from universities and various student groups. This is also an unethical practice by
the universities.
b. They used an in-person survey given to 1500 students. These students were randomly
solicited at popular places on campus. The sampling technique was a convenience
sample. The report did not attempt to make inferences about the population of college
students. The report simply provided statistics collected from their sample. The naïve
reader would most likely make the inference that the numbers from the sample apply to
the population as a whole. This should be made clearer in the report.
c. The subjects surveyed include 1) how students pay for their education, 2) how they use
credit cards, 3) how many of them use credit cards, and 4) attitudes toward credit card
marketing on campus. It would be interesting to see what the questions were and how
they were worded.
d. Because the survey focused on students’ opinions and did not provide information about
credit card use by the general population it is difficult to conclude that the marketing
practices companies use on campuses are different from those used to market cards to
the general public. Furthermore, it was not obvious that those students who had credit
cards obtained those cards as a direct result of the campus marketing efforts. What was
impressive was the amount of research the group did to support their claims of
unethical practices. The references to other reports and court cases were a better support
for their claims in question 1.
e. Answers vary. In general, because the study was based on a convenience sample the
results cannot be assumed to hold for the general population of students. Also, it would
be good to know how students’ use of credit cards compares to the general public.
2
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McGraw Hill LLC. f. The list of schools included in the survey is focused in a few states such as Massachusetts, California, and Colorado. There were very few schools from the southeast and virtually no private colleges or universities. Because it was a convenience
sample it is not appropriate to extend the results from the survey to the larger population of college students. However, many of the references cited did suggest that the problem was widespread.
g. First, they suggest eliminating "freebies" or gifts that would entice students to sign up for a credit card. Second, they suggest limiting posted marketing materials on campus. The third solution is to disallow acquisition of students’ lists. Fourth, they suggest that sponsorship should be discontinued. In other words, credit card companies cannot pay for student groups to get them new customers. The fifth recommendation is to enhance student awareness about credit card problems. Finally, they suggest that certain terms that take advantage of students should be discouraged. For example, hidden fees, changing contracts, and universal default should be eliminated. As a follow up to this report note that the Credit Card Accountability Responsibility and
Disclosure Act of 2009 or Credit CARD Act of 2009 is a federal law passed by the United States Congress and signed by President Barack Obama on May 22, 2009. It is comprehensive credit card reform legislation that aims "...to establish fair and transparent practices relating to the extension of credit under an open end consumer credit plan, and for other purposes."[1] Learning Objective: 01-3 1.7Answers will vary. Examples include: linking expectations on conduct to the company’s mission, explaining what is considered acceptable and unacceptable behavior, providing courses of action for employees when they have questions or believe an ethical guideline has been violated, documentation so that employees will know the code, addressing nepotism, addressing romantic relationships, addressing customer relationships and vendor relationships.
Learning Objective: 01-3 1.8Mary is falling for Pitfall 3: Conclusions from Rare Events. Just because an event is unlikely doesn’t mean it will never happen. The probability may be small but there is a chance of observing the same five winning numbers in the same sequence on two different days.
Learning Objective: 01-4 1.9Bob is falling for Pitfall 5: Assuming a Causal Link. Statistical association does not prove causation. Bob also appears to be falling for Pitfall 6: Generalization to Individuals. Even if there were a link between cell phones and binge drinking, the link would be between groups of cell phone users and groups of binge drinkers, not necessarily a one to one link.
Learning Objective: 01-4 1.10 a. It is not obvious that there is a direct cause and effect relationship between an individual choosing to use a radar detector and that individual choosing to vote and wear a seatbelt. 3 b. Increasing the use of radar detectors may not influence those who obey laws and are less concerned with government limitations.
Learning Objective: 01-4 1.11No, someone who picks 1-2-3-4-5-6 has the same chance of winning as anyone else because each number is chosen randomly.
Learning Objective: 01-4 1.12a. The phrase “much more” is not quantified. The study report is not mentioned. There is no
way to determine the veracity of this statement. Six causes of car accidents could be poor weather, road construction, heavy traffic, inexperienced driver, engine failure, and drinking. Smoking is not on this list.
b. Smokers might pay less attention to driving when lighting a cigarette. Learning Objective: 01-4 1.13The percent reduction might not seem important because it appears so small but when multiplied by millions of calls each day it does translate into a significant improvement.
Learning Objective: 01-4 1.14 a. The conclusion was a broad generalization. This can cause ethical issues if action was taken against employees that had legitimate complaints about management decisions. b. The sample is too small, and non-random, creating bias. c. The sample is once again way too small and is non random. This again creates bias which creates no causal link. Learning Objective: 01-4 1.15Sarah’s statement is not correct. Most people would feel the difference is practically important. 0.9% of 231,164 is 2,080 patients.
Learning Objective: 01-4 1.16The headline implies causation but we cannot assume causation just because the repeal came before the increase in deaths. The deaths could have been going up each year before this study or there could be other variables contributing to the increase in deaths.
Although the research accounts for some third variables such as increased registrations, it does not prove causality.
Learning Objective: 01-4 1.17a. Many people have math “phobia”, and because statistics involves math the subject can sound scary. The subject of statistics has a reputation for being difficult and this can cause fear of the unknown. b. There is usually not the same fear towards an ethics class. This is because there is much more emphasis on unethical behavior in the media, to the extent that ethical behavior and an understanding of how to be ethical is widely accepted as a requirement to graduate and then succeed. Learning Objective: 01-2 4
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