Deck 2: Reasoning With Data

Question 1

If you are trying to prove that A causes B, why does it make sense to have your null hypothesis be "A does not cause B"?

A) Data cannot confirm a hypothesis.
B) It is easier to make strong inductive arguments when rejecting a hypothesis.
C) We must allow for B to cause A.
D) Data cannot confirm a hypothesis and it is easier to make strong inductive arguments when rejecting a hypothesis.

Answer 1

D

Question 2

In the deductive reasoning behind the claim that "If firms can price discriminate, then prices will be higher in markets with lower price elasticities of demand" the role of "prices will be higher in markets with lower price elasticities of demand" is:

A) a method of proof.
B) a conclusion.
C) a sample.
D) an assumption.

Answer 2

B

Question 3

Which of the following is an example of the use of Transposition as a method of proof for "If A, then B"?

A) A implies B
B) Not B implies A
C) Not A implies B
D) Not B implies Not A

Answer 3

D

Question 4

I give you a coin, and you flip it 100 times. Let X = the number of heads observed in those 100 flips. You build the following line of reasoning: Steps
1) You assume each flip is an independent, random outcome.
2) You assume the coin is fair.
3) Using your statistics book, you conclude that X is distributed binomial with mean 50 and variance 25.
4) Based on this distribution, you conclude that you would observe X < 41 or X > 59 approximately 5% of the time.
5) You observe X = 37 and conclude that the probability that X < 41 or X > 59 is not 5%.
6) Because the probability that X < 41 or X > 59 is not 5%, you conclude the coin is not fair.
Which of these steps is part of deductive reasoning?

A) Steps 1, 2, 3, 4, and 6 only
B) Steps 4 and 6 only
C) All 6 steps
D) Steps 3, 4, and 5 only

Question 5

A conclusion whose validity can be meaningfully tested using observable data is an example of:

A) inductive reasoning.
B) data mining.
C) empirically testable conclusion.
D) direct proof.

Question 6

Suppose we are proving the statement that if two integers are even, then their sum is even. We execute the proof by first showing that if integer A and B are even, then they can be defined as A = 2k and B = 2m. We then note that their sum must be A + B = 2(k + m), which must be even. This is an example of what type of proof?

A) Proof by induction
B) Proof by transposition
C) Direct proof
D) Inductive reasoning

Question 7

Given that an individual's presence at the scene of the crime is required in order for that individual to commit the crime, the use of alibis, or evidence of suspects being somewhere other than the crime scene at the time of the crime is an example of what sort of proof?

A) Proof by induction
B) Proof by transposition
C) Direct proof
D) Inductive reasoning

Question 8

You having two employees working on commission - employee A and employee B. Over the course of 80 weeks, you observe the sales of each employee. Let X = the number of times employee A has more sales than employee B. You build the following line of reasoning: Steps
1) You assume each sales observation is an independent, random outcome.
2) You assume each employee has equal likelihood of have greater sales in a week.
3) Using your statistics book, you conclude that X is distributed binomial with mean 40 and variance 20.
4) Based on this distribution, you conclude that you would observe X < 32 or X > 48 approximately 5% of the time.
5) You observe X = 53 and conclude that the probability that X < 32 or X > 48 is not 5%.
6) Because the probability that X < 32 or X > 48 is not 5%, you conclude employee A and employee B do not have equal likelihood of having greater sales in a week.
Which of these steps is part of deductive reasoning?

A) Steps 1, 2, 3, and 4 only
B) Steps 1, 2, 3, 4, and 6 only
C) All 6 steps
D) Steps 3, 4, and 5 only

Question 9

Which of the following is not an empirically testable conclusion?

A) The unemployment rate would not have risen above 8% if the U.S. Treasury would have bailed out Lehman Brothers leading into the Great Recession.
B) Larger firms are more productive.
C) Multinational firms pay higher wages.
D) States with minimum wage laws experience higher unemployment rates.

Question 10

The process of forming conclusions, judgments, or inferences from facts or premises is:

A) causal relationships.
B) business analytics.
C) predictive analytics.
D) reasoning.

Question 11

I give you a coin, and you flip it 100 times. Let X = the number of heads observed in those 100 flips. You build the following line of reasoning: Steps
1) You assume each flip is an independent, random outcome.
2) You assume the coin is fair.
3) Using your statistics book, you conclude that X is distributed binomial with mean 50 and variance 25.
4) Based on this distribution, you conclude that you would observe X < 41 or X > 59 approximately 5% of the time.
5) You observe X = 37 and conclude that the probability that X < 41 or X > 59 is not 5%.
6) Because the probability that X < 41 or X > 59 is not 5%, you conclude the coin is not fair.
Which of these steps is part of inductive reasoning?

A) Step 5 only
B) Steps 5 and 6 only
C) Steps 1, 2, and 3 only
D) Step 6 only

Question 12

For the purposes of reaching sound conclusions with data analysis it is critical that:

A) data mining is used.
B) the reasoning/logic is sound.
C) causal inference is used.
D) None of the answers is correct.

Question 13

Which is not a primary component in deductive reasoning?

A) Assumptions
B) Methods of proof
C) Sample of observations
D) Conclusions

Question 14

Which method of proof is generally more effective at identifying hidden or implicit assumptions of an argument?

A) Direct proof
B) Proof by induction
C) Proof by transposition
D) None of the answers is correct.

Question 15

A description of the rules and/or steps behind the reasoning process is known as:

A) logic.
B) business analytics.
C) predictive analytics.
D) causal relationships.

Question 16

In the deductive reasoning behind the claim that "If firms sell homogenous products, then prices should fall to marginal costs" the role of "firms sell homogenous products" is:

A) a method of proof.
B) a conclusion.
C) the sample.
D) an assumption.

Question 17

By showing your colleague that the conclusions of your analysis regarding the optimal pricing strategy for the firm would be the same under a variety of different assumptions regarding the price response of competitors is an example of:

A) direct proof.
B) selection bias.
C) robustness.
D) degree of support.

Question 18

To prove the claim that "If an individual's income goes up, their demand for our product goes up" by Transposition it would suffice to show:

A) any individual with falling demand must have falling income.
B) every individual with increasing income has increasing demand.
C) any individual with falling income has falling demand.
D) None of the answers is correct.

Question 19

Which of the following are empirically testable conclusions?

A) The average price of cable television will be higher if DirecTV and Comcast are allowed to merge relative to if they are not.
B) Price markups should be lower in markets with more firms.
C) Your career earnings will be higher if you get an MBA.
D) None of the answers is correct.

Question 20

If you are intending to refute conclusions drawn via clear deductive reasoning, what must you disagree with?

A) The assumptions
B) The methods of proof
C) The assumptions and the methods of proof
D) The assumptions or the methods of proof

Question 21

Suppose you hypothesized that the mean of X is 7. You then collect a sample of observations of X. Using statistical theory, you know that, if the mean of X is 7, the probability that your sample average is above 9 or below 5 is 0.05. If you observe a sample mean of 10:

A) You make the inductive argument that the probability that your sample average is above 9 or below 5 is not 0.05. The strength of this argument is 5%.
B) You make the deductive argument that the probability that your sample average is above 9 or below 5 is not 0.05. The strength of this argument is 95%.
C) You make the inductive argument that the probability that your sample average is above 9 or below 5 is 0.05. The strength of this argument is 95%.
D) None of the answers is correct.

Question 22

Suppose you hypothesized that the average salary in the company is $75,000. You then collect a sample of salaries for employees of the company. Using statistical theory, you know that, if the average salary is $75,000, then the probability that your sample average is above $90,000 or below $60,000 is 0.05. If you observe an average salary of $91,000:

A) you make the inductive argument that the probability that your sample average is above $90,000 or below $60,000 is not 0.05. The strength of this argument is 5%.
B) you make the deductive argument that the probability that your sample average is above $90,000 or below $60,000 is not 0.05. The strength of this argument is 95%.
C) you make the inductive argument that the average salary in the company is not $75,000. The strength of this argument is 95%.
D) None of the answers is correct.

Question 23

Reasoning that goes from the general to the specific or "top-down" logic is known as:

A) inductive reasoning.
B) deductive reasoning.
C) proof by transposition.
D) direct proof.

Question 24

I give you a die, and you roll it 600 times. Let X = the number of ones observed in those 600 rolls. You build the following line of reasoning: Steps
1) You assume each roll is an independent, random outcome.
2) You assume the dice is fair.
3) Using your statistics book, you conclude that X is distributed binomial with mean 100 and variance 83.
4) Based on this distribution, you conclude that you would observe X < 82 or X > 118 approximately 5% of the time.
5) You observe X = 123 and conclude that the probability that X < 82 or X > 118 is not 5%.
6) Because the probability that X < 82 or X > 118 is not 5%, you conclude the die is not fair.
Which of these steps is part of inductive reasoning?

A) Step 5
B) Steps 4 and 6 only
C) All 6 steps
D) Steps 4, 5, and 6 only

Question 25

Suppose a salesperson claims Brand A is more effective at cleaning dishes than Brand B. If you assume this claim to be true, what is an empirically testable conclusion that would follow from this assumption?

A) Brand A will cost less than Brand B.
B) The probability a dish gets cleaned using Brand A is higher than the probability it gets cleaned using Brand B.
C) Brand A is a better purchase than Brand B.
D) The probability Brand A is available for purchase is greater than the probability Brand B is available for purchase.

Question 26

Why is it that inductive reasoning does not involve a proof?

A) We cannot prove the general from the specific.
B) Mathematical induction only applies to deductive reasoning.
C) We cannot prove the specific from the general.
D) None of the answers is correct.

Question 27

When making a claim via inductive reasoning, which of the following is true concerning the degree of support?

A) A subjective degree of support has a statistical foundation, generally constructed via deductive reasoning.
B) A subjective degree of support has a statistical foundation, generally constructed via inductive reasoning.
C) An objective degree of support has a statistical foundation, generally constructed via deductive reasoning.
D) An objective degree of support has a statistical foundation, generally constructed via inductive reasoning.

Question 28

The primary difference between the population and a particular data sample is that:

A) the population is the universe of potential observations, while a sample is a subset.
B) the data sample is random.
C) the data sample is representative.
D) the data sample is large enough to draw inferences.

Question 29

Which of the following conclusions is an example of inductive reasoning?

A) If firms have economies of scale, then average costs will fall with total output.
B) If a firm has monopoly power, then it will price above marginal cost.
C) If consumer demand is downward sloping, quantity demanded will fall as prices increase.
D) Given that firms in the auto industry in the Southwest were profitable, all firms nationwide were profitable.

Question 30

A business analyst uses data mining to establish a negative correlation between customer complaints and customer relations training hours for employees. She concludes increasing training will reduce customer complaints. What is a key weakness in this approach as stated?

A) Data demands are exceedingly high.
B) Deductive reasoning uses untestable assumptions.
C) Strength of inductive reasoning is unknown.
D) There is no use of inductive reasoning.

Question 31

Reasoning that goes from the specific (e.g., a data sample) to the general (e.g. the population) is known as:

A) inductive reasoning.
B) deductive reasoning.
C) proof by transposition.
D) direct proof.

Question 32

Suppose a fellow consultant claims that regional markets with more grocery stores per capita will be more competitive. If you assume this claim to be true, what is an empirically testable conclusion that would follow from this assumption?

A) Grocery store sales will be higher in locations with more grocery stores per capita.
B) Grocery store costs of goods will be higher in locations with more grocery stores per capita.
C) Grocery store sales will be lower in locations with more grocery stores per capita.
D) Grocery store prices will be higher in locations with more grocery stores per capita.

Question 33

Degrees of support based off opinion and ultimately lacking any statistical foundation are often termed:

A) objective degree of support.
B) strength.
C) deductive reasoning.
D) subjective degree of support.

Question 34

Which of the following conclusions is an example of deductive reasoning?

A) Given that small firms had higher growth rates in 2017, they will likely have higher growth rates in 2018.
B) Housing prices will rise this year, as they have in the last five years.
C) If industry supply is upward sloping, quantity supplied will rise as prices increase.
D) After only observing white-colored swans, you conclude that all swans are white.

Question 35

The primary distinction between a subjective degree of support and an objective degree of support is the use of a(n):

A) causal relationship.
B) statistical foundation.
C) empirically testable conclusion.
D) direct proof.

Question 36

After using deductive reasoning, you determine that if the probability of team A beating team B is 50% then the probability of team A beating team B four times in a row is about 6%. If after observing team A beating team B four times in a row you decide to reject the assumption that team A's likelihood of beating team B is 50%, what is the degree of support for this conclusion?

A) 6%
B) 3%
C) 94%
D) 50%

Question 37

Your boss claims that customers who call to complain will drop your firm's services within the next year. He provides evidence that he believes supports his claim by showing everyone who dropped your firm's service last year also complained. How should you respond?

A) Agree that the evidence supports the claim - it suggests a proof by transposition.
B) Agree that the evidence supports the claim - it suggests a direct proof.
C) Disagree that the evidence supports the claim - it suggests a different causal relationship.
D) None of the answers is correct.

Question 38

Taking samples of registered voters and asking them to disclose their preferences leading up to elections in order to assess the view of all registered voters on a particular candidate is an example of what sort of reasoning?

A) Inductive reasoning
B) Deductive reasoning
C) Selection bias
D) Direct proof

Question 39

The statement, "The Golden State Warriors are the most watched basketball team in the Oakland TV market, therefore they are the most watched NBA team" is an example of what type of reasoning?

A) Direct proof
B) Deductive reasoning
C) Inductive reasoning
D) Proof by transposition

Question 40

You having two employees working on commission - employee A and employee B. Over the course of 80 weeks, you observe the sales of each employee. Let X = the number of times employee A has more sales than employee B. You build the following line of reasoning: Steps
1) You assume each sales observation is an independent, random outcome.
2) You assume each employee has equal likelihood of have greater sales in a week.
3) Using your statistics book, you conclude that X is distributed binomial with mean 40 and variance 20.
4) Based on this distribution, you conclude that you would observe X < 32 or X > 48 approximately 5% of the time.
5) You observe X = 53 and conclude that the probability that X < 32 or X > 48 is not 5%.
6) Because the probability that X < 32 or X > 48 is not 5%, you conclude employee A and employee B do not have equal likelihood of having greater sales in a week.
Which of these steps is part of inductive reasoning?

A) Step 4 only
B) Steps 5 and 6 only
C) Steps 1, 2, and 3 only
D) Step 5 only

Question 41

Suppose a colleague claims that if the price elasticity of demand for the company's good is inelastic, then raising the price of the good will lead to higher sales. This is example of what type of reasoning?

A) Inductive reasoning
B) Indirect causal relationship
C) Deductive reasoning
D) Proof by transposition

Question 42

In attempting to determine the average starting salary of your university's graduates, you conduct a survey of a recent set of graduates given to you from the gift/donation department of your university. What is wrong with this logic?

A) Predictable-world bias
B) Selection bias
C) Over-optimism bias
D) Confirmation bias

Question 43

All of your friends listen to hard rock music more than any other genre. Consequently, you conclude that hard rock music is the most popular genre in the United States. What is the flaw in your reasoning?

A) Confirmation bias
B) Availability bias
C) Predictable-world bias
D) Parallel processing

Question 44

A baseball player refuses to wash his uniform during a winning streak because he believes leaving it intact is helping his team win. What is wrong with this logic?

A) Predictable-world bias
B) Availability bias
C) Over-optimism bias
D) Confirmation bias

Question 45

A poker player refuses to bet on hands with a pair of aces after losing four consecutive hands with a pair of aces. What is wrong with this logic?

A) Predictable-world bias
B) Selection bias
C) Over-optimism bias
D) Confirmation bias

Question 46

Using the following question in a survey to elicit the effectiveness of an advertising campaign would suffer from what sort of bias: "Was the primary reason for your purchase of this product the advertising campaign?"

A) Selection bias
B) Confirmation bias
C) Availability bias
D) Statistical bias

Question 47

Which of the following is an example of flawed inductive reasoning due to availability bias?

A) Basing your assessment of the risk of a plane crash on television news reports.
B) Believing the odds to be in your favor at a casino after winning the lottery.
C) Determining the popularity of a government policy based on the opinions of your friends.
D) Basing your assessment of the risk of a plane crash on television news reports and determining the popularity of a government policy based on the opinions of your friends.

Question 48

Which of the following is an example of flawed inductive reasoning due to predictable-world bias?

A) Basing your assessment of the likelihood of a political candidate being elected based off your co-workers' preferences.
B) Believing a hedge fund will consistently beat the market in the future, because of its dominant performance over the last 3 years.
C) Gauging customer satisfaction of a product based on the voluntarily submitted comments on a product's webpage.
D) None of the answers is correct.

Question 49

Which of the following is not a reason for weak inductive arguments?

A) Availability bias
B) Statistical bias
C) Confirmation bias
D) Predictable-world bias

Question 50

Believing that all investment funds consistently beat the market because the hedge funds that exist this year all of have beaten the market over the last decade suffers from faulty inductive reasoning because of what type of bias?

A) Predictable-world bias
B) Availability bias
C) Over-optimism bias
D) Confirmation bias