1

Assignment 4
B. Find the solutions to the following problems! Show all essential work.
Problem 1
A business administration student wants to determine the mean amount general managers
in domestic mid-sized companies (regarding the companys yearly revenues) earn per
month. The student found a report by the Department of Labor that estimated the standard
deviation to be 1,000.
a. For a sample of n = 400, the mean amount earned by general managers is =
3,500. Determine the 95% confidence interval for estimating the population
mean.
b. Suppose that the error in estimating the mean is to be less than 100 with a 99
percent level of confidence. What is the minimum required sample size?
Solution:
a. Since 400 is above 30 we may use the z-Value approximation:

[]
b. Error less than 100 gives abound of 200 (Both sides!!!). Then just use the given
formula:

2

Problem 2
It is important for airlines to follow the published scheduled departure times of flights.
Suppose that one airline that recently sampled the records of 246 flights originating in New
York found that 10 flights were delayed for severe weather; 4 flights were delayed for
maintenance concerns, and all other flights were on time.
a. Construct a 95% confidence interval for the proportion of on-time departures.
1. 246, 246 10 4 232, 232 246 0.943089 n x p x n = = = = = =
2. Distribution check:
246 0.943089 231.999894 5 n p = = > and (1 ) 246 (1 0.943089) 14.000106 5 n p = = >
or ( ) ( )
1 246 0.943089 1 0.943089 13.203346 9 n p p = = >
The normal approximation may be used.
3.
/ 2
(1 ) 0.95 / 2 0.025 1.960 z
o
o = o = =
4. Confidence Interval:
( ) ( )
/ 2 / 2

1 1

0.95
P P P P
P P z p P z
n n
o o
| |

|
s s + =
|
|
\ .

| |
0.943089(1 0.943089)
0.943089 1.960 0.943089 1.96 0.014771 0.914138;0.972039
246

= =
b. Now, suppose that your sample estimate of the proportion in a. is based on a sample of
492 flights. Will the resulting 95% confidence interval be wider or narrower than the one
you calculated in a.? Give a brief explanation! There is no need to perform any
calculations.

As n goes up the bound of the confidence interval goes down so the confidence interval gets
narrower
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Assignment 5
B. Find the solutions to the following problems! Show all essential work.
Problem 1

A producer of steel cables wants to test if the steel cables it produces have breaking strength
of 5000 lb. A breaking strength of less than 5000 lb would not be adequate, and to produce
steel cables with breaking strengths of more than 5000 lb would unnecessarily increase
production costs. The producer takes a random sample of 64 pieces and finds that the
average breaking strength is 5100 lb and the sample standard deviation is 480 lb.

a) Should the producer accept the hypothesis that its steel cable has a breaking strength
of 5000 lb at the 5% level of significance?
b) Find the rejection and acceptance regions in terms of pounds (lb), the units of the
problem.

Solution
a)
1. H
0
: = 5000 lb H
1
: 5000 lb two-tailed test o = .05 -> z
/2
=1.96
2. n = 64; o = 480
3. since n > 30 we have a large sample and normal distribution can be used
4.
5100 5000
1.67
480
64
X
z
n

o

= = =
5. Our critical value is 1.96 this is larger than our test statistic in absolute terms
6. Conclusion : do not reject H
0

b)
To define the acceptance region (at the 5% level of significance) in terms of pounds, we find the 95%
confidence interval about

:
0 0
480
5000 1.96 [4882.4,5117.6]
64
X
z z
n
o
o = = =
Acceptance region: [4882.4, 5117.6]
Rejection region:

> 5117.6 or

< 4882.4


4

Steps in Hypothesis Testing:
1. Define H
0
and H
1
, check significance level and decide if it is a one or two-tailed test
a. H
0
Status Quo:
i. H
0

ii. H
0

iii. H
0
=



2. Take a look at the sample statistics: Observations, sample mean, standard
deviation
3. Distribution check:
a. small or large sample?
b. Population normal?
c. known?
4. Derive test statistic
5. Compare with critical value
6. Make your final statement/conclusion


5

A. Select the correct answer:

1. A Tape II error is
a. rejecting H
1
when it is false.
b. accepting a false H
0
.
c. reject H
0
when it is true.
d. not rejecting a false H
1
.

The correct answer is: __b___
2. For a particular significance level and sample size the value of the t for a one-tailed
test is
a. always less than z.
b. always more than z.
c. equal to z.
d. equal to 0.

The correct answer is: __b___

3. Suppose in a one-sample test the sample mean was 10 and the sample size was 15.
The sample standard deviation was 3. The appropriate test statistic is
a. the binomial distribution.
b. the t distribution.
c. the z distribution.
d. none of the above.

The correct answer is: __d___

4. A random sample of 10 observations is selected from a normal population with an
unknown standard deviation. To conduct a test of hypothesis about the population
mean the appropriate degrees of freedom is
a. 1
b. 10
c. 9
d. None of the above

The correct answer is: ___c___


6

5. For a one-tailed test of hypothesis for a single population mean with 13 degrees of
freedom, the value of the test statistic was 1.863. The p -value is
a. between .05 and .025.
b. between .10 and .05.
c. greater than .10.
d. less than .001.

The correct answer is: __a___
6. The critical value is
a. calculated from sample information.
b. cannot be negative.
c. the point that divides the acceptance region from the rejection region.
d. a value determined from the test statistic.

The correct answer is: __c___
7. The level of significance
a. is frequently .05 or .01.
b. can be any value between 0 and 1.
c. is the likelihood of rejecting the null hypothesis when it is true.
d. all of the above.

The correct answer is: __d___

8. The power of a test is the probability of rejecting the null hypothesis when it is true.
a. True
b. False

The correct answer is: __b___

9. For a given level of significance, if the sample size is increased, the power of the test
will decrease.
a. True
b. False

The correct answer is: __b___


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10. If the level of significance of a test is increased, the power of the test will increase.
a. True
b. False

The correct answer is: __a___
11. A pharmaceutical company claims that four out of ve doctors prescribe the pain
medicine it produces. If you wish to test this claim, how would you set up the null
and alternative hypotheses?
a. H
0
: p = 0.8; H
1
: p 0.8
b. H
0
: p 0.8; H
1
: p 0.8
c. H
0
: p 0.8; H
1
: p 0.8
d. H
0
: p 0.8; H
1
: p = 0.8

The correct answer is: __a___

12. It is found that Web surfers will lose interest in a Web page if downloading takes
more than 12 seconds at 28K bid rate. If you wish to test the effectiveness of a newly
designed Web page in regard to its download time, how will you set up the null and
alternative hypotheses?
a. H
0
: = 12; H
1
: 12
b. H
0
: 12; H
1
: 12
c. H
0
: 12; H
1
: 12
d. H
0
: 12; H
1
: 12

The correct answer is: __b___