PowerPoint Presentation Package to Accompany:

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PowerPoint PresentationPackage to Accompany

• Statistics for Business and Economics
• (5th Edition)
• by Paul Newbold, William L. Carlson, and Betty M.
  Thorne

by Mark P. Karscig Department of Economics and
Finance, Central Missouri State University
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Chapter 1

• Why Study Statistics?

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Dealing with Uncertainty

• Everyday decisions are based on incomplete
  information

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Dealing with Uncertainty

• The price of IBM stock will be higher in six
  months than it is now.

versus
The price of IBM stock is likely to be higher in
six months than it is now.
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Dealing with Uncertainty

• If the federal budget deficit is as high as
  predicted, interest rates will remain high for
  the rest of the year.

versus
If the federal budget deficit is as high as
predicted, it is probable that interest rates
will remain high for the rest of the year.
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Sampling

• Population and Sample
• A population is the complete set of all items in
  which an investigator is interested. A
  population is the set of all of the outcomes from
  a system or process that is to be studied. N
  represents population size.

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Examples of Populations

• Names of all registered voters in the United
  States.
• Incomes of all families living in Daytona Beach.
• Annual returns of all stocks traded on the New
  York Stock Exchange.
• Grade point averages of all the students in your
  university.

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Sampling

• Population and Sample
• A sample is an observed subset of population
  values with sample size given by n.

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Sampling

• Random Samples
• Simple random sampling is a procedure in which
  every possible sample of n objects is equally
  likely to be chosen.

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Sampling

• Random Samples
• Simple random sampling is a procedure in which
  every possible sample of n objects is equally
  likely to be chosen. The resulting sample is
  usually called a random sample.

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Statistical Thinking

• Statistical thinking is a philosophy of learning
  and action based on the following fundamental
  principles
• All work occurs in a system of interconnected
  processes
• Variation exists in all processes, and
• Understanding and reducing variation are the
  keys to success.

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Statistical Thinking

• Systems and Processes
• A system is a number of components that are
  logically and sometimes physically linked
  together for some purpose.

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Statistical Thinking

• Systems and Processes
• A process is a set of activities operating on a
  system that transforms inputs to outputs. A
  business process is groups of logically related
  tasks and activities, that when performed
  utilizes the resources of the business to provide
  definitive results required to achieve the
  business objectives.

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Making Decisions

• Data, Information, Knowledge
• Data specific observations of measured numbers.
• Information processed and summarized data
  yielding facts and ideas.
• Knowledge selected and organized information
  that provides understanding, recommendations, and
  the basis for decisions.

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Making Decisions

• Descriptive and Inferential Statistics
• Descriptive Statistics include graphical and
  numerical procedures that summarize and process
  data and are used to transform data into
  information.

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Making Decisions

• Descriptive and Inferential Statistics
• Inferential Statistics provide the bases for
  predictions, forecasts, and estimates that are
  used to transform information to knowledge.

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The Journey to Making Decisions
Decision ?
Knowledge
Experience, Theory, Literature,
Inferential Statistics, Computers
Information
Descriptive Statistics, Probability, Computers
Begin Here Identify the Problem
Data
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Key Words

• Data
• Descriptive Statistics
• Inferential Statistics
• Information
• Knowledge
• Population

• Process
• Sample
• Simple Random Sampling
• Statistical Thinking
• System