National Occupational Competency Testing Institute (NOCTI) Business Practice Exam

What is a characteristic feature of a pareto chart?

1. A chart that uses only line graphs

2. A chart that represents data in descending order with bars

3. A chart used exclusively for financial data

4. A chart that only shows cumulative totals

The correct answer is: A chart that represents data in descending order with bars

A Pareto chart is designed specifically to display the frequency or impact of problems in a way that helps prioritize improvement efforts. One of its defining characteristics is that it represents data using bars arranged in descending order. This means the most significant factors or issues appear first, making it visually intuitive to identify which problems have the greatest overall effect. This arrangement helps users focus their attention and resources on addressing the most critical issues, following the 80/20 principle where often a small number of causes lead to the majority of effects. The use of descending order bars allows for easy comparison and understanding of how different categories contribute to the total impact. This is essential for decision-making and prioritization, particularly in business and quality improvement contexts. The characteristic feature emphasizes its role in data-driven decision-making rather than mere representation of data. While line graphs can be useful for other types of data visualization, they do not suit the fundamental purpose of a Pareto chart. Additionally, Pareto charts are not limited to financial data; they can be applied to various contexts, including production quality and customer complaints. Lastly, while cumulative totals can be displayed on a Pareto chart (often represented as a line graph over the bars), the primary feature that distinguishes it is the descending order of