Unformatted text preview: nt. On
the other hand, only 130 of the 1300 insured drivers 25 years or older had been involved in at
least one automobile accident.
What is the probability that an insured driver of any age will be involved in an accident?
A. 35%
B. 20.5%
C. 65%
D. 68.3%
E. 79.5% 36. A pharmaceutical company manufacturing pregnancy test kits wants to determine the
probability of a woman not being pregnant when the test results indicate pregnancy. It is
estimated that the probability of pregnancy among potential users of the kit is 10%. According
to the company laboratory test results 1 out of 100 nonpregnant women tested pregnant (false
positive). On the other hand, 1 out of 200 pregnant women tested nonpregnant (false
negative). A woman has just used the pregnancy test kit manufactured by the company and
the results showed pregnancy. What is the probability that she is not pregnant?
A. 90%
B. 0.9%
C. 8.3%
D. 91.7%
E. 10.85% 11879 Chapter 01  An Introduction to Business Statistics 37. A pharmaceutical company manufacturing pregnancy test kits wants to determine the
probability of a woman actually being pregnant when the test results indicate that she is not
pregnant. It is estimated that the probability of pregnancy among potential users of the kit is
10%. According to the company laboratory test results 1 out of 100 nonpregnant women
tested pregnant (false positive). On the other hand, 1 out of 200 pregnant women tested nonpregnant (false negative). A woman has just used the pregnancy test kit manufactured by the
company and the results showed that she is not pregnant. What is the probability that she is
pregnant?
A. 1%
B. 0.9%
C. 0.05%
D. 8.3%
E. 0.056% 38. The utility curve given below represents the preferences of a _________________
decision maker. A. Risk averse
B. Risk neutral
C. Risk seeking
D. None of the above 11880 Chapter 01  An Introduction to Business Statistics 39. The utility curve given below represents the preferences of a _________________
decision maker. A. Risk averse
B. Risk neutral
C. Risk seeking
D. None of the above 40. The utility curve given below represents the preferences of a _________________
decision maker. A. Risk averse
B. Risk neutral
C. Risk seeking
D. None of the above 11881 Chapter 01  An Introduction to Business Statistics 41. In utility analysis, a utility curve that shows a rapid increase in utility for initial amounts
of money followed by a gradual leveling off for larger amount of money is appropriate for a
risk _____ decision maker.
A. Seeking
B. Averse
C. Neutral
D. None of the above 42. __________________ statistics is an area of statistics that uses Bayes' theorem to update
prior belief about a probability or population parameter to a posterior belief.
A. Bayesian
B. Utility theory
C. Preposterior analysis
D. Risk theory 43. The _____________ criterion finds the best possible payoff for each alternative and then
chooses the alternative that yields the maximum payoff.
A. Maximin
B. Certainty
C. Maximax
D. Decision 44. The _____________ criterion finds the best possible payoff for each alternative and then
chooses the alternative that yields the maximum payoff.
A. Maximin
B. Certainty
C. Maximax
D. Decision 11882 Chapter 01  An Introduction to Business Statistics 45. The ____________________ criterion for choosing among alternative actions assumes
that the state of nature with the worst payoff will be experienced.
A. Maximin
B. Certainty
C. Maximax
D. Decision 46. The ____________________ criterion for choosing among alternative actions assumes
that the state of nature with the best payoff will be experienced.
A. Maximin
B. Certainty
C. Maximax
D. Decision 47. A corn farmer has categorized the weather into three possible levels. The weather
conditions will affect the timing of the harvest and the associated payoff. In this situation, the
weather conditions is called the ____________________________.
A. Alternatives
B. States of nature
C. Payoffs
D. Perfect information 48. Decisionmakers in business organizations make most decisions in environments that
involve some degree of ___________________.
A. Risk
B. Utility
C. Certainty
D. Uncertainty 11883 Chapter 01  An Introduction to Business Statistics 49. When making a decision in an environment of ________________, the decision maker
knows which of the states of nature will actually occur.
A. Risk
B. Utility
C. Certainty
D. Uncertainty 50. A tire manufacturer needs to make a decision about the amount of production for the
coming month (high vs. low). The level of production largely depends on the level of demand.
For this situation, the amount of production constitutes the ___________________ actions.
A. Alternative
B. Utility
C. Certainty
D. Uncertainty 51. _______________________ is a diagram that assists the decision maker in analyzing a
decision problem.
A. Bayes Theorem
B. Decision tree
C. Utility curve
D. Maximax 52. In the application of Bayes' theorem the sample information is combined with prior
probabilities to obtain ___________________ probabili...
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