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Algebra: Equations

Question 1
A pizza parlor incurs two types of costs: variable costs and fixed costs. Variable costs include pizza dough,
toppings, sauce, and cheese. Variable costs are $6.00 per pizza, and they vary with the number of pizzas sold.
Fixed costs include utility bills, rent, and cost of equipment. Fixed costs are $2,600 per month. The equation
that shows the total monthly cost is C = 6p + 2,600. What is the coefficient of p?

a. 2,600 (the fixed cost)

b. 6 (the variable cost)
c. p (the number of pizzas sold)
d. C (the total cost)

Question 2
Using the above information, what is the total cost for a month in which the pizza parlor makes 1,500 pizzas?

a. $12,500
b. $6,400
c. $11,600
d. $7,300

Question 3
A photographer faces two types of cost: variable costs and fixed costs. Variable costs include such items as
film, photo paper, and processing chemicals. Variable costs are $40 per photograph package. Fixed costs
include utilities, camera equipment, and studio rent. These fixed costs total $1,600 per month. Each
photograph package sells for $200. In one month, the photographer sells 150 photograph packages. How much
is his profit? (Note: Profit = Revenue ? Cost)

a. $24,200
b. $25,600
c. $22,400
d. $23,110

Question 4
A doctor wants to spend five more hours per day checking patients than doing paperwork. She spends a total of
7.5 hours at work each day. How many hours a day will she check patients, and how many hours a day will she
do paperwork? (Let c = check patients, p = paperwork.)

a. c = 6.25; p = 1.25
b. c = 2.5; p = 5
c. c = 5; p = 2.5
d. c = 6.58; p = 1.58

Algebra: Inequalities

Question 5
A soft drink company sells its product for $.50 per can. Each can costs the company $.10 to produce. The
company's monthly overhead is $500. How many cans must be produced per month for the company to show a
profit? (Note: Profit = Revenue ? Cost)

a. x > 125,000
b. x > 22,500
c. x < 255
d. x > 1,250

Question 6
A comic book publisher sells its comic books for $3 each. A comic book costs $1 to print, bind, and distribute.
Each month, the publisher has $1,000 in fixed costs. If the publisher wants its profits to be $4,500 or more,

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which of the intervals below depict the number of comic books the publisher should publish to reach the goal?
(Note: Profit = Revenue ? Cost)

a. interval a
b. interval b
c. interval c
d. interval d

Algebra: Functions

Question 7

The demand for book bags has the following properties:

At P = $50, the number demanded (x) is 0
P(x) is decreasing everywhere
P(x) has a changing slope

Which graph illustrates a function with these properties?

a. graph a
b. graph b
c. graph c
d. graph d

Question 8
Which of the following is not a function?

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a. graph a
b. graph b
c. graph c
d. graph d

Algebra: Linear Functions

Question 9
A company's production function is f(x)= 100x - 5, What is the slope and y-intercept of this linear function?

a. slope = -5, y-intercept = (0, 100)

b. slope = -5, y-intercept = (100, 0)
c. slope = 100, y-intercept = (0, -5)
d. slope = 100, y-intercept = (-5, 0)

Question 10
The demand function for answering machines is a linear function that passes through the points (0, 150) and
(10, 100). What is the slope of this function?

a. -5
b. -50
c. 10
d. 150

Precalculus: Exponents, Roots, and Logarithms

Question 1
Megan puts $2,500 in a bank account with an annual interest rate of 9%, compounded quarterly. The future
value of this investment is described by the formula FV = Co ´ (1 + r)N, where

FV = future value
Co = initial investment
r = annual rate of interest, divided by number of periods per year
N = number of periods

How much will Megan have in the account after five years?

a. $3,901.27
b. $3,846.56
c. $3,920.78
d. $12,525.06

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Question 2
The formula for the present value of an investment with compounded interest is PV = C N ´ (1 + r)-N. Which of
the following expressions is equivalent?

a.

b.

c.

d.

Question 3
The formula for the future value of an investment with compounded interest is FV = C o ´ (1 + r)N. After four

months, an investment compounded annually would be described as

Which of the following expressions is equivalent?

a.

b.

c.

d.

Question 4
A company invests in a money market account that has an annual interest rate of 7 percent compounded
continuously. The future value of this formula is described by the equation FV = C o ´ eR ´ T , where

FV = future value
Co = initial investment
R = annual rate of interest
T = time period in years

How many years will it take for the company's initial investment to quadruple?

a. approximately 15 years
b. approximately 20 years
c. approximately 4 years
d. Not enough information is given.

Precalculus: Nonlinear Functions

Question 5
A certain company's profits are described by the function f(x) = 14(x - 28) 2 + 7. The function's vertex is the
point on the curve where profits are at a maximum. What are the coordinates of the vertex?

a. (14, 28)
b. (14, 7)
c. (28, 7)
d. (28, 14)

Question 6

The demand for a certain product can be described by the function . Which of the following graphs has the
same shape as this function?

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a. graph a
b. graph b
c. graph c
d. graph d

Question 7
A certain investment is described by the function f(x) = 10(1.08) x . What is the y-intercept of this function, and
is the function increasing or decreasing as x increases?

a. y-intercept = (0, 1.08); increasing

b. y-intercept = (0, .08); increasing
c. y-intercept = (0, 10); increasing
d. y-intercept = (0, 10); decreasing

Precalculus : Slope and Derivatives

Question 8
A company's average unit costs are described by the nonlinear function f(x) = (x - 50) 2 + 20. What is this
curve's average rate of change between the points (50, 20) and (52, 24)?

a. 1
b. 2
c. 3
d. 4

Question 9
A certain company's profits are described by the parabolic function f(x) = 14x 2 - 28x + 7. What is the first
derivative of this function?

a. 14x - 28
b. 14x - 28 + 7
c. 28x + 7
d. 28x - 28

Question 10
A company's average costs are described by the function f(x) = x 2 - 8x + 400. What is the minimum point of
this function?

a. (0, 400)
b. (1, 393)
c. (2, 388)

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d. (4, 384)

Discrete Probability Distributions: Probability

Question 1
A customer at a department store will pay with either cash, credit, or check. The probability the customer uses
cash is .20, while the probabilities of using credit or check are .60 and .20, respectively. If these events are
mutually exclusive, what is the probability that a customer will use either cash or credit?

a. .20
b. .40
c. .80
d. 1.00

Question 2
Consider the following table, which lists the location and experience of managers for a particular corporation. If
a manager is chosen at random, what is the probability that a manager from the East Coast will be chosen?

Years of Experience
Geographic Location 0-5 6-9 10 or more
Midwest 4 3 2 9
East Coast 7 5 3 15
West Coast 12 10 7 29
23 18 12 53

a. .13
b. .15
c. .28
d. .30

Question 3
Refer to the table again. If a manager with five or less years of experience is chosen, what is the conditional
probability that that manager is from the Midwest?

a. .08
b. .17
c. .40
d. .43

Discrete Probability Distributions: Discrete Random Variables

Question 4
The table below shows starting salaries for a group of recent college graduates. Given the probability
distribution below, what is the probability that a graduate's starting salary will be $41,000 or below?

Starting Salaries Likelihood

$28,000 .02
$34,000 .06
$41,000 .15
$57,000 .25
$65,000 .32
$76,000 .15
$83,000 .03
$91,000 .02

a. .77
b. .23

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c. .15
d. .08

Question 5
A silicon chip manufacturer tests six chips to determine if they are defective. The probability that they are
defective follows a binomial distribution. The probability of a chip being defective is .1. What is the probability
that exactly two chips are defective?

a. .007
b. .020
c. .098
d. .200

Discrete Probability Distributions: Summary Measures

To answer the next three questions, use the following section of an actuarial table containing accident rates for
drivers in a certain city.

Probability Number of accidents

.35 0
.25 1
.20 2
.15 3
.05 4

Question 6
Based on the data in the table, what is the expected value of accident rates across all drivers in this section?

a. 1.0
b. 1.1
c. 1.2
d. 1.3

Question 7
What is the variance for this group of drivers?

a. 1.0
b. 1.2
c. 1.5
d. 1.7

Question 8
What is the standard deviation for this group of drivers?

a. 1.0
b. 1.2
c. 1.5
d. 1.7

Continuous Probability Distributions: Continuous Random Variables

Question 1
True or False: The useful life of a battery is an example of a continuous random variable.

a. True
b. False

Question 2
True or False: The number of applicants for a job is an example of a continuous random variable.

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a. True
b. False

Question 3
True or False: The number of calls to a technical help line is an example of a continuous random variable.

a. True
b. False

Question 4
True or False: The weight of a bag of potato chips is an example of a continuous random variable.

a. True
b. False

Continuous Probability Distributions: Normal Distribution

Question 5
What proportion of the probability is contained within two standard deviations of the mean in a normally
distributed random variable?

a. 68%
b. 70%
c. 95%
d. 99%

Question 6
The following normally distributed variables all have the same mean but different standard deviations (s).
Which of these distributions features values that are the most concentrated around the expected value?

a. s = 2
b. s = 4
c. s = 8
d. The concentration is the same for all three distributions.

Question 7
Each employee at a particular organization recycles an average of 10 pounds of office paper each month, with a
standard deviation of 2.5 pounds. Given that the amount recycled follows a normal distribution, what is the
likelihood that any particular employee, chosen at random, will recycle 5 pounds of paper or less?

a. .950
b. .500
c. .050
d. .025

Continuous Probability Distributions : Standard Normal Distribution

Question 8
What is the mean of a standardized random variable that follows a normal distribution?

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a. 10
b. 5
c. 1
d. 0

Question 9
Consider a normal distribution with a mean of 100 and a standard deviation of 20. What would be the
standardized value (Z score) of 75?

a. -0.80
b. -0.75
c. -1.25
d. -1.50

Statistical Sampling: Populations and Samples

Question 1
True or False: A sample should be randomly selected in order to effectively estimate a population.

a. True
b. False

Question 2
True or False: A sample should be biased in order to effectively estimate a population.

a. True
b. False

Question 3
True or False: A sample should be large in order to effectively estimate a population.

a. True
b. False

Question 4
True or False: A sample should be representative in order to effectively estimate a population.

a. True
b. False

Statistical Sampling: Statistical Estimation

A car company wants to determine the durability of its vehicles' paint and finish in the Midwest region of the
United States. The company takes a random sample of customers who purchase a new vehicle; the company
then tracks the vehicle through time observing the condition of the paint until it begins to show signs of
deterioration. Use the information in the table to answer questions 1-4.

Car Car 1 Car 2 Car 3 Car 4 Car 5 Car 6 Car 7 Car 8 Car 9 Car 10
Years 2 1.5 4.75 3.75 3.5 2.5 1.25 2.75 3.75 1.75

Question 5
What is the mode of this sample?

a. 1.75
b. 2.63
c. 2.75
d. 3.75

Question 6
What is the median of this sample?

a. 1.75
b. 2.63

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c. 2.75
d. 3.75

Question 7
What is the sample mean?

a. 1.75
b. 2.63
c. 2.75
d. 3.75

Question 8
What is the sample variance and sample standard deviation?

a. s2 = 1.15, s = 1.33
b. s2 = 1.33, s = 1.15
c. s2 = 2.75, s = 1.66
d. s2 = 1.66, s = 2.75

Question 9
A tire company claims that its tires will last on average for 65,000 miles. Recently a sample of 100 customers
who had purchased the tires revealed a sample mean of 59,000 miles and a sample standard deviation of 7,500
miles. Construct a 95 percent confidence interval around the sample mean.

a. [57,530, 60,470]
b. [63,530, 66,470]
c. [57,766, 60,234]
d. [58,000, 61,000]

Statistical Sampling: t-Distribution

Question 10
A shoe company wants to know how long its new brand of shoes will last, but the testing process is long and
the test lab can only allocate 16 test stations. The company takes a random sample of 16 shoes and runs the
test which makes the shoes pound up and down on a surface to simulate running. The company counts the
number of test "steps" it takes to make the shoe defective. For the sample of 16 pairs of shoes, the sample
mean is 1.842 million steps with a sample standard deviation of 0.395 million steps. What is the 95 percent
confidence interval for the mean?

a. [1.632, 2.052]
b. [1.026, 2.620]
c. [1.447, 2.237]
d. [1.805, 1.879]

Question 11
A company claims that they can tune-up all makes and models of domestic cars in 45 minutes on the average.
The local business bureau is checking on complaints and needs to verify the company's claim. After choosing 25
different customers at random and timing the tune-ups on these vehicles, the bureau finds that the sample
mean is 51.4 minutes and the sample standard deviation is 4.6 minutes. Construct a 98 percent confidence
interval around the sample mean.

a. [50.4, 52.4]
b. [46.8, 56.0]
c. [41.4, 61.4]
d. [49.1, 53.7]

Discrete Probability Distributions: Covariance and Correlation

Question 12
The following table shows the relationship between temperature and ice cream sales.

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Temperature 98 85 70 75
Sales 130 140 80 100

What is the covariance between these two variables?

a. 1,600
b. 210
c. 280
d. 40

Question 13
A company owns two assets. Let the random variable x denote the value of the first asset, and let the random
variable y denote the value of the second asset. It is known that the standard deviation of x is 4, the standard
deviation of y is 5, and the covariance of x and y is 10. What is the correlation coefficient?

a. .20
b. .38
c. .50
d. .67

Statistical Sampling: Simple Linear Regression

Question 14
A regression line can be described by the following formula.

r i = a i + b i rm + Î i

In this formula, what does b stand for?

a. the dependent variable

b. the y-intercept
c. the slope
d. the error term

Question 15
Which of the following equations best describe the regression line for the scatter plot shown below?

a. y = 2 + 15x
b. y = 15 + 2x2
c. y = -.5x + 5
d. y = 15 + .5x

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