Q: A summary table for a categorical variable lists the following frequencies: Category A: 15, Category B: 25, Category C: 10. What is the percentage for Category B? Use the formula $$\text{Percentage} = \frac{\text{Frequency}}{\text{Total}} \times 100.$$

$$\frac{25}{40} \times 100 = 62.5\%$$

Question 1

A company wants to compare the distribution of monthly electricity bills for two different cities. Which visualization would best allow them to compare the concentration and spread of bills in each city, and why?

Accepted Answer

A cumulative percentage polygon (ogive), because it allows direct comparison of the proportion of bills below each amount for both cities.

Question 2

A summary table for a categorical variable lists the following frequencies: Category A: 15, Category B: 25, Category C: 10. What is the percentage for Category B? Use the formula $$	ext{Percentage} = \frac{	ext{Frequency}}{	ext{Total}} 	imes 100.$$

Accepted Answer

$$\frac{25}{40} 	imes 100 = 62.5\%$$

Question 3

A frequency distribution for salaries ranges from $$50,000 to 110$$,000 and you want 6 class intervals. What is the class interval width? Use the formula $$	ext{Class Interval Width} = \frac{	ext{Highest Value} - 	ext{Lowest Value}}{	ext{Number of Classes}}.$$

Accepted Answer

$$\frac{110,000 - 50,000}{6} = 10,000$$

Question 4

Which of the following is a common pitfall when creating pie or doughnut charts for comparing market share across years?

Accepted Answer

Changing the order and color of slices between charts, which can mislead viewers.

Question 5

A contingency table for Fund Type (Growth, Value) and Risk Level (Low, Average, High) shows that 84% of high-risk funds are Growth funds. What does this indicate about the relationship between Fund Type and Risk Level?

Accepted Answer

High-risk funds are predominantly Growth funds, indicating a strong association between high risk and Growth type.

Question 6

A histogram of meal costs at two restaurant locations shows that most Center City meals are between $$40 and 60$$, while most Metro Area meals are between $$30 and 60. $$What does this suggest about the central tendency and spread of meal costs?

Accepted Answer

Meal costs are more concentrated at higher values in Center City than in Metro Area.

Question 7

Which visualization would best help a manager identify the 'vital few' causes of customer complaints that account for the majority of issues?

Accepted Answer

A Pareto chart, because it orders causes by frequency and shows cumulative percentage.

Question 8

A cumulative percentage distribution for call center response times shows that 80% of calls are answered within 20 seconds. What does this mean?

Accepted Answer

80% of calls are answered in 20 seconds or less.

Question 9

A scatter plot of advertising expense (X) and sales revenue (Y) for a chain of stores shows points clustered along an upward-sloping line. What does this indicate?

Accepted Answer

There is a positive relationship between advertising expense and sales revenue.

Question 10

When constructing a frequency distribution, why is it important to use mutually exclusive class intervals?

Accepted Answer

To ensure each data value is counted in only one class, preventing double-counting.

Question 11

A multidimensional contingency table summarizes Fund Type, Market Cap, and Risk Level. What is a key limitation of such a table when a numerical variable (e.g., 10YrReturn) is added?

Accepted Answer

It can only display a single summary statistic (like the mean) for each combination, not the full distribution.

Question 12

Which of the following best describes the main advantage of using a colored scatter plot over a multidimensional contingency table when analyzing three variables (two numerical, one categorical)?

Accepted Answer

It allows you to see the actual data points and patterns, not just summary statistics.

Question 13

A time-series plot of annual movie revenues from 1995 to 2016 shows a generally upward trend with minor fluctuations. What is the most appropriate conclusion?

Accepted Answer

Movie revenues have generally increased over time, despite some fluctuations.

Question 14

Which of the following is an example of 'chartjunk' that can distort the interpretation of a chart?

Accepted Answer

Adding unnecessary 3D effects or decorative images to a bar chart.

Question 15

A company wants to filter its dataset to show only large-cap value funds with a five-star rating and an expense ratio below 1%. Which tool in Excel would allow them to do this most efficiently?

Accepted Answer

Using slicers on a PivotTable to filter by multiple variables.

Question 16

In a percentage polygon comparing three-year returns for growth and value funds, the growth fund line is consistently to the right of the value fund line. What does this indicate?

Accepted Answer

Growth funds generally have higher three-year returns than value funds.

Question 17

A bar chart is constructed to compare the frequency of different error types in a customer service process. Which of the following is a best practice for making the chart effective?

Accepted Answer

Order the bars from highest to lowest frequency and label each bar clearly.

Question 18

A company presents only the percentage change in sales for the most recent year, ignoring the previous two years. What type of misleading practice is this?

Accepted Answer

Selective summarization, which can create a false impression of performance.

Chapter 2 - Organizing and Visualizing Variables in Business Statistics

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