Chapter PI, Problem 9RE

(a)

To determine

To comment on any problems you see with the use of the mean and the standard deviation as summary statistics.

Explanation of Solution

In the question, it is given that a credit card bank is investigating on the incidence of the fraudulent card use. To examine this situation, bank looks for the standard industrial code (ISC) of the business related to transactions. Thus, the histogram for these data is given which displays the number of transactions and the ISC code for it. By looking at these data and the histogram, we can say that these data are categorical data and so the man and the standard deviation are meaningless for these data as it cannot express any value.

(b)

To determine

To explain how well do you think the Normal model will work on these data.

Explanation of Solution

In the question, it is given that a credit card bank is investigating on the incidence of the fraudulent card use. To examine this situation, bank looks for the standard industrial code (ISC) of the business related to transactions. Thus, the histogram for these data is given which displays the number of transactions and the ISC code for it. By looking at the data and the histogram, we can say that the Normal model will not work appropriately on these data. As even if it fits well then the Normal model is meaningless as it is a categorical data used in the following investigation.