Chapter 1
Data and Statistics
Applications in Business and Economics
Data
Data Sources
Descriptive Statistics
Statistical Inference
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Applications in
Business and Economics
Accounting
Public accounting firms use statistical sampling
procedures when conducting audits for their clients.
Finance
Financial analysts use a variety of statistical
information, including price-earnings ratios and
dividend yields, to guide their investment
recommendations.
Marketing
Electronic point-of-sale scanners at retail checkout
counters are being used to collect data for a variety of
marketing research applications.
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Applications in
Business and Economics
Production
A variety of statistical quality control charts are used
to monitor the output of a production process.
Economics
Economists use statistical information in making
forecasts about the future of the economy or some
aspect of it.
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Data
Elements, Variables, and Observations
Scales of Measurement
Qualitative and Quantitative Data
Cross-Sectional and Time Series Data
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Data and Data Sets
Data are the facts and figures that are collected,
summarized, analyzed, and interpreted.
The data collected in a particular study are referred to
as the data set.
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Elements, Variables, and Observations
The elements are the entities on which data are
collected.
A variable is a characteristic of interest for the
elements.
The set of measurements collected for a particular
element is called an observation.
The total number of data values in a data set is the
number of elements multiplied by the number of
variables.
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Data, Data Sets,
Elements, Variables, and Observations
Observation
Variables
Stock Annual Earn/
Company Exchange Sales($M) Sh.($)
Dataram AMEX 73.10 0.86
EnergySouth OTC 74.00 1.67
Keystone NYSE 365.70 0.86
LandCare NYSE 111.40 0.33
Psychemedics AMEX 17.60 0.13
Elements Data Set Datum
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Qualitative and Quantitative Data
Data can be classified as being qualitative or
quantitative.
The statistical analysis that is appropriate depends on
whether the data for the variable are qualitative or
quantitative.
In general, there are more alternatives for statistical
analysis when the data are quantitative.
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Qualitative Data
Qualitative data are labels or names used to identify
an attribute of each element.
Qualitative data can be either numeric or
nonnumeric.
The statistical analysis for qualitative data are rather
limited.
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Quantitative Data
Quantitative data indicate either how many or how
much.
• Quantitative data that measure how many are
discrete.
• Quantitative data that measure how much are
continuous because there is no separation between
the possible values for the data..
Quantitative data are always numeric.
Ordinary arithmetic operations are meaningful only
with quantitative data.
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Cross-Sectional and Time Series Data
Cross-sectional data are collected at the same or
approximately the same point in time.
• Example: data detailing the number of building
permits issued in June 2000 in each of the counties
of Texas
Time series data are collected over several time
periods.
• Example: data detailing the number of building
permits issued in Travis County, Texas in each of
the last 36 months
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Data Sources
Existing Sources
• Data needed for a particular application might
already exist within a firm. Detailed information
is often kept on customers, suppliers, and
employees for example.
• Substantial amounts of business and economic
data are available from organizations that
specialize in collecting and maintaining data.
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Data Sources
Existing Sources
• Government agencies are another important
source of data.
• Data are also available from a variety of industry
associations and special-interest organizations.
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Data Sources
Internet
• The Internet has become an important source of
data.
• Most government agencies, like the Bureau of the
Census (www.census.gov), make their data
available through a web site.
• More and more companies are creating web sites
and providing public access to them.
• A number of companies now specialize in making
information available over the Internet.
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Descriptive Statistics
Descriptive statistics are the tabular, graphical, and
numerical methods used to summarize data.
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Example: Hudson Auto Repair
The manager of Hudson Auto would like to have
a better understanding of the cost of parts used in the
engine tune-ups performed in the shop. She examines
50 customer invoices for tune-ups. The costs of parts,
rounded to the nearest dollar, are listed below.
91 78 93 57 75 52 99 80 97 62
71 69 72 89 66 75 79 75 72 76
104 74 62 68 97 105 77 65 80 109
85 97 88 68 83 68 71 69 67 74
62 82 98 101 79 105 79 69 62 73
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Example: Hudson Auto Repair
Tabular Summary (Frequencies and Percent
Frequencies)
Parts Percent
Cost ($) Frequency Frequency
50-59 2 4
60-69 13 26
70-79 16 32
80-89 7 14
90-99 7 14
100-109 5 10
Total 50 100
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Example: Hudson Auto Repair
Graphical Summary (Histogram)
18
16
14
Frequency
12
10
8
6
4
2
Parts
50 60 70 80 90 100 110 Cost ($)
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Example: Hudson Auto Repair
Numerical Descriptive Statistics
• The most common numerical descriptive statistic
is the average (or mean).
• Hudson’s average cost of parts, based on the 50
tune-ups studied, is $79 (found by summing the
50 cost values and then dividing by 50).
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Statistical Inference
Statistical inference is the process of using data
obtained from a small group of elements (the sample)
to make estimates and test hypotheses about the
characteristics of a larger group of elements (the
population).
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Example: Hudson Auto Repair
Process of Statistical Inference
1. Population
consists of all 2. A sample of 50
tune-ups. Average engine tune-ups
cost of parts is is examined.
unknown.
unknown
4. The value of the 3. The sample data
sample average is used provide a sample
to make an estimate of average cost of
the population average. $79 per tune-up.
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End of Chapter 1
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