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is partially responsible for the high defect rate. In an effort to decrease the

percentage of defective chips, management decides to provide additional training

to those employees hired within the last year. After training was implemented, a

sample of 450 chips revealed only 27 defects. Was the additional training effective

in lowering the defect rate?

a. Write the null and alternative hypotheses. a. H0: p = 0.08 and HA: p < 0.08

b. What is the value of the test statistic? b. z = (0.06-0.08) 0.080.92 450 =

-1.56

c. What is the associated P-value? c. P-value = 0.0594

d. State your conclusion using = 0.01. d.At = 0.01 we fail to reject the null

hypothesis. At the 0.01 level of significance, we cannot conclude that the

additional training significantly lowered the defect rate.

2) A survey claims that 7 out of 10 customers recommend Western Drugs for

pharmacy issues. To test this claim, a random sample of 100 customers is obtained

from the list of rewards customers. Of these 100 customers, 75 indicate that they

recommend using Western Drugs for pharmacy needs. We would like to know if this

claim is accurate. Use alpha = 0.05

a. Write the null and alternative hypotheses. a. H0: p = 0.7 and HA: p 0.7

b. Let's perform a one sample z-test for proportions: What is the value of the test

statistic?

b. z = (0.75-0.7) 0.70.3 100 = 1.09

c. What is the associated P-value? c. P-value = 0.2757

d. State your conclusion using = 0.05. d. At = 0.05 we fail to reject the null

hypothesis.

3)A real estate agency, located in a metropolitan area in the northeastern U.S., kept

data on the various types of properties purchased in the area. Historically, 15% of

purchases were for condominiums, 30% were for townhouses, 40% for single family

homes, 10% for commercial properties and 5% for land. With changing

demographics, the agency wondered if the current distribution matches the

historical distribution. Recent data showed the following:

H0: The current distribution of property sales matches the historical

distribution. HA: The current distribution of property sales differs from the

historical distribution.

b. What is the value of the test statistic and its associated P-value? b. Assuming

that the null hypothesis is true, we use the historical distribution to find

the expected frequencies. For example, the expected frequency for

condos is (0.15) (325) = 48.75. Expected frequencies are shown in the

table above next to observed frequencies. 2 = 62.538 P-value < 0.0001

c. State the conclusion at = 0.05. c. The P-value is very small (less than ),

so we reject the null hypothesis. There is strong evidence that the current

distribution of property sales differs from the historical distribution.

population (millions), migration rate of mobile subscriptions to smart phones (in %)

and smart phone penetration per capita (in %) for a sample of 15 countries.

population? Interpret.

a. -0.266, negative and weak.

b. What is the correlation between smart phone penetration and population?

Interpret.

b. -0.419, negative and moderate.

c. What is the correlation between migration rate of mobile subscriptions and smart

phone penetration? Interpret. c. 0.885, positive and strong.

5) The neoclassical growth model predicts that for identical savings rates and

population growth rates, countries should converge to the per capita income level.

This is referred to as the convergence hypothesis. One way to test for the presence

of convergence is to compare the growth rates over time to the initial starting level.

(a) If you regressed the average growth rate over a time period (1960-1990) on the

initial level of per capita income, what would the sign of the slope have to be to

indicate this type of convergence? Explain. Would this result confirm or reject the

prediction of the neoclassical growth model?

(a) You would require a negative sign. Countries that are far ahead of

others at the beginning of the period would have to grow relatively slower

whereas the neoclassical growth model predicts conditional convergence,

i.e., there will only be convergence if countries have identical savings,

population growth rates, and production technology.

(b) The results of the regression for 104 countries were as follows:

g6090 = 0.019 0.0006 RelProd60 , R 2 = 0.00007, SER = 0.016,

where g6090 is the average annual growth rate of GDP per worker for the 19601990 sample period, and RelProd60 is GDP per worker relative to the United States

in 1960. Interpret the results. Is there any evidence of unconditional convergence

between the countries of the world? Is this result surprising? What other concept

could you think about to test for convergence between countries?

(b) An increase in 10 percentage points in RelProd60 results in a decrease

of 0.00006 in the growth rate from 1960 to 1990, i.e., countries that were

further ahead in 1960 do grow by less. There are some countries in the

sample that have a value of RelProd60 close to zero (China, Uganda, Togo,

Guinea) and you would expect these countries to grow roughly by 2

percent per year over the sample period. The regression R2 indicates that

the regression has virtually no explanatory power. The result is not

surprising given that there are not many theories that predict

unconditional convergence between the countries of the world.

(c) You decide to restrict yourself to the 24 OECD countries in the sample. This

changes your regression output as follows:

g6090 = 0.048 0.0404 RelProd60 , R 2 = 0.82 , SER = 0.0046

How does this result affect your conclusions from above?

(c) Judging by the size of the slope coefficient, there is strong evidence of

unconditional convergence for the OECD countries. The regression R2 is

quite high, given that there is only a single explanatory variable in the

regression. However, since we do not know the sampling distribution of

the estimator in this case, we cannot conduct inference.

A company that sells eco-friendly cleaning products is concerned that only 19.5% of

people who use such products select their brand. A marketing director suggests that

the company invest in new advertising and labeling to strengthen its green image.

The company decides to do so in a test market so that the effectiveness of the

marketing campaign may be evaluated. Based on data collected in the test market,

the company constructed a 98% confidence interval for the proportion of all

consumers who might buy their brand. The resulting interval is 16% to 28%. What

conclusion should the company reach about the new marketing campaign?

A. The data do not provide convincing evidence that the marketing

campaign increases the percentage of customers for the company's

products.

B. The data do provide convincing evidence that the marketing campaign increases

the percentage of customers for the company's products.

C. The new marketing campaign is effective in increasing the percentage of

customers buying their brand.

D. The company should launch the new marketing campaign.

E. None of the above.

A report on the U.S. economy indicates that 28% of Americans have experienced

difficulty in making mortgage payments. A news organization randomly sampled

400 Americans from 10 cities named the "fastest dying cities in the U.S." (Forbes

Magazine, August 2008) and found that 136 reported such difficulty. Does this

indicate that the problem is more severe among these cities? The correct null and

alternative hypotheses for testing this claim are:

A. H0 : p = 0.28 and HA : p > 0.28

B. H0 : p = 0.28 and HA : p < 0.28

C. H0 : p = 0.28 and HA : p 0.28

D. H0 : p 0.28 and HA : p = 0.28

E. H0 : p > 0.28 and HA : p = 0.28

A report on the U.S. economy indicates that 28% of Americans have experienced

difficulty in making mortgage payments. A news organization randomly sampled

400 Americans from 10 cities named the "fastest dying cities in the U.S." (Forbes

Magazine, August 2008) and found that 136 reported such difficulty. Does this

indicate that the problem is more severe among these cities? The correct value of

the test statistic for testing this claim is

A. z = -1.28

B. z = -2.67

C. z = 2.67

D. z = 1.96

E. z = -1.28

A national study report released by the Center for Studying Health System Change

(HSC) in 2010, indicated that 20.9% of Americans were identified as having medical

bill financial issues. Many people in families with problems paying medical bills in

2010 experienced severe financial consequences from their medical debt, with

about two-thirds reporting problems paying for other necessities and a quarter

considering bankruptcy, the study found. What if a news organization randomly

sampled 400 Americans from 10 cities and found that 90 reported having such

difficulty. A test was done to investigate whether the problem is more severe among

these cities. The p-value for this test is

A. 0.2156

B. 0.0539

C. 0.1078

D. 0.4312

E. None of the above.

innovativeness and change. A consultant hired to assess the company's

organizational culture finds that only 15% of employees are open to new ideas and

approaches toward their work. Consequently the company conducts a program for

employees in order to reinforce the new corporate philosophy. After the program is

completed, employees are surveyed to see if a greater percentage is now open to

innovativeness and change. The correct alternative hypothesis is

A. p = 0.15

B. p > 0.15

C. p < 0.15

D. > 0.15

A company that has a 10% market share launches a marketing campaign. At the

end of the campaign period, the company conducts a survey in order to assess

whether its market share has increased. The result of the survey issued to 500

customers was 12.5%. What is the associated p-value?

A. 0.0314

B. 0.1256

C. 0.0628

D. 0.0066

E. None of the above

Top management of a large multinational corporation wants to create a culture of

innovativeness and change. A consultant hired to assess the company's

organizational culture finds that only 15% of employees are open to new ideas and

approaches toward their work. Consequently the company conducts a program for

employees in order to reinforce the new corporate philosophy. Based on data

collected after the program, the finds the 95% confidence interval for the proportion

of all employees open to new ideas to be 18% to 22%. What should the company

conclude?

A. The null hypothesis should not be rejected.

B There is no evidence to suggest that the program improved employees' attitudes

toward innovativeness and change.

C. There is evidence that the program improved employees' attitudes

toward innovativeness and change.

D. Both A and B.

E. Both A and C.

A national study report released by the Center for Studying Health System Change

(HSC) in 2010, indicated that 20.9% of Americans were identified as having medical

bill financial issues. Many people in families with problems paying medical bills in

2010 experienced severe financial consequences from their medical debt, with

about two-thirds reporting problems paying for other necessities and a quarter

considering bankruptcy, the study found. What if a news organization randomly

sampled 400 Americans from 10 cities and found that 90 reported having such

difficulty. A test was done to investigate whether the problem is more severe among

A. Inconclusive.

B. There is no indication the medical bill problem is more severe among

the cities surveyed.

C. There is insufficient evidence to conduct the test.

D. There is evidence that the medical bill problem is more severe among the cities

surveyed.

E. None of the above.

A national study report released by the Center for Studying Health System Change

(HSC) in 2010, indicated that 20.9% of Americans were identified as having medical

bill financial issues. Many people in families with problems paying medical bills in

2010 experienced severe financial consequences from their medical debt, with

about two-thirds reporting problems paying for other necessities and a quarter

considering bankruptcy, the study found. What if a news organization randomly

sampled 400 Americans from 10 cities and found that 90 reported having such

difficulty. A test was done to investigate whether the problem is more severe among

these cities. What is the value of the test statistic?

A. 0.787

B. 0.016

C. -0.787

D. 2.479

E. None of the above.

A survey claims that 7 out of 10 customers recommend Western Drugs for

pharmacy issues. To test this claim, a random sample of 100 customers is obtained

from the list of rewards customers. Of these 100 customers, 75 indicate that they

recommend using Western Drugs for pharmacy needs. We would like to know if this

claim is accurate. State your conclusion using = 0.05.

A. The null hypothesis is not supported: more than 70% of customers recommend

Western Drugs for pharmacy issues.

B. The null hypothesis is not supported: less than 70% of customers recommend

Western Drugs for pharmacy issues.

C. The null hypothesis is not supported: the percentage of customers who

recommend Western Drugs for pharmacy issues is not equal to 75%.

D. More information is required to draw a valid conclusion

E. The null hypothesis is supported: 70% of customers recommend

Western Drugs for pharmacy issues.

A satellite TV provider finds that 15% of their customers switch providers when a

discount offer expires. A consultant tries a small experiment and offers a random

sample of customers a free 6 months of service if they commit to staying as a

customer for two years. Not surprisingly, they find that the new switching rate is

lower by a statistically significant amount. Should they offer short-term discounts to

all their customers? What should the company take into consideration when

deciding if they should offer short-term discounts to all their customers?

B. The cost of the service.

C. How much the switch is lowered (the effect size).

D. A, B and C.

E. Both B and C.

A z-test is best since the information is an established proportion (= 34%)

and a sample proportion (= 42%).

Null: percent of students attending events = 34%

Alternate: percent of students attending events > 34%

The percent of students who attend a Duluth sporting event is 34%. At a recent

soccer game, 42% of the students showed up to root for the Wildcats. Is this strong

evidence that more students are attending sporting events?

sample mean (= 52).

Null: average is = 60

Alternate: average is < 60

A teacher wants to know how well students perform in her math class relative to

students in other math classes in her school district. She administers a standardized

test, which students in other classes had taken, with a mean (average) of 60 and

standard deviation of 10. Her class has 40 students with a sample mean of 52 and

sample standard deviation = 3.5. Which statistical method should she use to test if

the test average is lower?

and a sample proportion (= 50/100 = 50%).

Null: percent of people who show improvements = 45%

Alternate: percent of people who show improvement > 45%

Drug X is administered to 100 patients with a particular

disease. 50 improve. Test whether this drug is better than drug Y, which is known to

produce improvement in 45% of patients.

sample mean (= 84).

Null: average with or without instruction is = 78

Alternate: average with instruction is > 78

Let's say a group of 17 average ninth grade students are assigned to a new style of

science teaching. Their performance before entering the new classroom was

average, though as a result of the new style of classroom instruction we believe

they should score higher than average on tests of science knowledge if the new

curriculum is working. After 6 weeks in the classroom, we give them a test

assessing their knowledge of basic science concepts to see if the teaching has been

effective. We find the following: x(bar) = 84, S.D. = 16, N = 17

We know from studies done at UCLA that ninth graders in general score an average

of 78 on this exam (0 = 78). Is the difference we observed after six weeks of

instruction consistent with what is likely under conditions of chance alone of does it

reflect a true difference, a better performance on the test than average?

and a sample proportion (= 200/500 = 40%).

Null: percent of people who would vote for a candidate = 54%

Alternate: percent of people who would vote for a candidate < 54%

In a recent Gallop Poll, it was reported that 54% of the population would vote for a

particular candidate.

In a sample poll of 500 voters, 200 say that they will support a particular candidate

in the election. Is this enough proof to show that the population is losing faith in the

candidate?

sample mean (= 1.21).

Null: average exhaust emissions = 1.45 g

Alternate: average exhaust emissions < 1.45 g

The EPA reports that the exhaust emissions for a certain car model has a normal

distribution with a

mean of 1.45 grams of nitrous oxide per mile and a standard deviation of 0.4. The

car manufacturer claims their new process reduces the mean level of exhaust

emitted for this car model. A SRS of 28 cars is taken and the mean level of exhaust

emitted for this sample is 1.21 grams.

sample mean (= 30.2%).

Null: average total spending on housing = 31%

Alternate: average total spending on housing < 31%

The Census Bureau reports that households spend an average of 31% of their total

spending on housing. A homebuilders association in Cleveland believes that this

average is lower in their area. They interview a sample of 40 households in the

Cleveland metropolitan

area to learn what percent of their spending goes toward housing. Suppose that the

study finds x-bar = 30.2% for the 40 households in the sample.

Take to be the mean percent of spending devoted to housing among all Cleveland

households.

parameter such as a population mean or a population proportion

- it is assumed to be true when forming a hypothesis test

what is stated in the null hypothesis.

a. The null hypothesis Ho is assumed false.

b. Action should be taken when the null hypothesis Ho is

rejected.

c. The alternative hypothesis Ha is assumed false.

d. The alternative hypothesis Ho is assumed true.

an automobile product research group developed a new fuel injection

system designed to increase the miles-per-gallon rating of a particular

automobile. With the current model obtaining an average of 24 miles per

gallon, the hypothesis test is: Ho: u < 24 Ha: u > 24

Type I Error The error of rejecting Ho when it is true. (finding a guilty man

innocent)

man to jail)

Type I Error Example researchers claiming that the new system improves

the miles-per-gallon rating when in fact the new system is not any better than

the current system

the null hypothesis is true as an equality.

making a Type I error

symbol) are preferred. (.001)

If the cost of making a Type I error is not too high: larger values

of (alpha symbol) are typically used. (.25)

a hypothesis test is .08?

a.) .05

b.) Not enough information is given to answer this question.

c.) .92

d.) .08

Which of the following represents a Type II error for testing H 0:

1500 versus H a: >1500

A Type II error would occur if we fail to reject H 0 and conclude that

1500 when in fact >1500.

a p-value for a hypothesis test?

a. knowledge of whether the test is one-tailed or two-tailed

b. the level of significance

c. the value of the test statistic

d. All of these are needed.

One-Tailed Test a hypothesis test in which rejection of the null hypothesis

occurs for values of the test statistic in one tail of its sampling distribution

occurs for values of the test statistic in either tail of its sampling distribution

hypothesis should be rejected

P-Value a probability that provides a measure of the evidence against the null

hypothesis given by the sample

Critical Value a value that is compared with the test statistic to determine

whether Ho should be rejected.

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