1. The probability that any marriage will end in divorce is 0.52 and the independent of this, the probability that any marriage will result in a birth of a child is 0.80. What is the probability when someone gets married that they will end up divorced and have children?

a) (0.52) + (0.80) = 1.32

**b) ****(0.52) ***** ****(0.80) ****= ****0.416**

c) (0.52) / (0.80) = 0.65

d) none of the above three answers are correct

*Explanation: since Divorce and Result in child are independent*

2. During the Computer Daze special promotion, a customer purchasing a computer and printer is given the choice of three free software packages. There are 10 different software packages from which to select. How many different packages can be selected? The problem is an example of a:

a) joint probability

b) conditional probability

c) permutation

**d) ****combination**

3. If an event can occur once out of every 25 times, it has the probability value of

a) 0.25

b) **0.04** = (1/25)

c) 0.00

d) none of the above three answers are correct

4. A coin is tossed six times. Which of the following sequences of heads (H) and tails (T) is more likely?

**a) ****HTHTHT**

b) HHHTTT

c) HHHHHH

d) all are equally likely

5. Probabilities are expressed with what values

a) -1.00 to +LOO

**b) ****0.00 to +1.00**

c) .0.00 to infinity

d) it depends on the type of problem

6. Alice‘s subjective probability that she will make dean’s list given that she gets an A in Psychology 120 is 0.90. Which is the appropriate notation for this conditional probability?

**a) ****p (dean’s list / A in Psy 120) ****= ****0.90**

b) p (A in Psy 120/ dean’s list) = 0.90

c) neither of the above two answers are correct

7. Which one of the following is NOT one of the major uses of the CPI?

a) The CPI is used to evaluate and determine economic policy:

b) The CPI is used to compare prices in different years.

c) The CPI is used to determine salary and price adjustments.

**d) ****.****All of the above three answers are major uses of the CPI.**

8. Using the 1989 base as a base, the price index for computers is .now 175. What does this index number mean?

a) price of computers has decreased 75% since 1989

b) **price of computers has increased 75% since 1989**

c) price of computers has increased 175% since 1989

d) none of the above three answers are correct

9. A economic indicator is one in which the highs, lows, and changes tend to come after or following changes in the economy.

**a) ****leading**

**b) ****coincidence**

**c) ****lagging**

d) multiple

* Note: (a), (b), (c) are correct*

10. Which of the following is not one of the eight major categories of goods and services in the market basket?

a) apparel

b) transportation

**c) ****child care**

d) medical care

11. Some criticisms of the CPI include all of the following except:

a) the market basket used in the CPI may not reflect current spending priorities

b) the CPl does not adjust for changes in quality

**c) ****the CPI takes advantage of sale prices**

d) the CPI does not measure prices for rural Americans.