Assignment 3

Business Statistics
Bus 578
Spring- 2014

Ahmed Hossain
CWID: 50116869

Date: 4/6/2014

Assignment-3 (Chs. 9, 10 and 12)

Due by Midnight of Sunday, April 6th, 2014: Total 75 points
True/False (One point each)
Chapter 9
1. The manager of the quality department for a tire manufacturing company wants to know the
average tensile strength of rubber used in making a certain brand of radial tire. The population is
normally distributed and the population standard deviation is known. She uses a Z test to test the
null hypothesis that the mean tensile strength is 800 pounds per square inch. The calculated Z
test statistic is a positive value that leads to a p-value of .009 for the test. If the significance level
() is .01, the null hypothesis would be rejected. True
2. You cannot make a Type II error when the null hypothesis is true. True
3. The power of a statistical test is the probability of not rejecting the null hypothesis when it is
true. False
4. The level of significance indicates the probability of rejecting a false null hypothesis. False
5. When conducting a hypothesis test about a single mean, other relevant factors held constant,
increasing the level of significance from .05 to .10 will decrease the probability of a Type II
error. True

Chapter10
6. In an experiment involving matched pairs, a sample of 14 pairs of observations is collected.
The degree of freedom for the t statistic is 12. False
7. In testing the difference between two means from two independent populations, the sample
sizes do not have to be equal to be able to use the Z statistic. True
8. In testing the difference between the means of two independent populations, if neither
population is normally distributed, then the sampling distribution of the difference in means will
be approximately normal provided that the sum of the sample sizes obtained from the two
populations is at least 30. True
9. If the limits of the confidence interval of the difference between the means of two normally
distributed populations were 0.5 and 2.5 at the 95% confidence level, then we can conclude that
we are 95% certain that there is no significant difference between the two population means.
False
10. When comparing two population means based on independent random samples, the pooled
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estimate of the variance is used if the population standard deviations are not known and assumed
unequal. False

Chapter 12
11. The chi-square distribution is a continuous probability distribution that is always skewed to
the right. True
12. In a contingency table, when all the expected frequencies equal the observed frequencies the
calculated 2 statistic equals 1. False
13. In a contingency table, if all of the expected frequencies equal the observed frequencies, then
we can conclude that there is a perfect dependence between rows and columns. False
14. In performing a chi-square test of independence, as the difference between the respective
observed and expected frequencies decrease, the probability of concluding that the row variable
is independent of the column variable increases. True
15. When we carry out a chi-square test of independence, the expected frequencies are based on
the Null hypothesis. True
Multiple Choices (Two points each)
Chapter 9
1. If a null hypothesis is rejected at a significance level of .05, it will ______ be rejected at a
significance level of .01
A. Always
B. Sometimes
C. Never
2. If a null hypothesis is not rejected at a significance level of .10, it will ______ be rejected at a
significance level of .05
A. Always
B. Sometimes
C. Never
3. When carrying out a large sample test of H0: =10 vs. Ha: 10 by using a p-value, we reject
H0 at level of significance when the p-value is:
A. Greater than /2
B. Greater than
C. Less than
D. Less than /2
E. Less than Z
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4. If you live in California, the decision to buy earthquake insurance is an important one. A
survey revealed that only 119 of 340 randomly selected residences in one California County
were protected by earthquake insurance.
Calculate the appropriate test statistic to test the hypotheses that 40% or more buy the insurance.
(You are dealing with proportions which are small numbers. Therefore keep at least four decimal
places in your intermediate steps and do the rounding to the two decimal places at the end only).
A. 1.88
B. 1.93
C. -1.88
D. -1.93
E. -1.65
Chapter 10
5. In order to test the effectiveness of a drug called XZR designed to reduce cholesterol levels, 20
heart patients' cholesterol levels are measured before they are given the drug. The same 20
patients use XZR for two continuous months. After two months of continuous use the 20
patients' cholesterol levels are measured again. The comparison of cholesterol levels before vs.
after administering the drug is an example of testing the difference between:
A. Two means from independent populations
B. Two means from independent populations with unknown variances
C. Two means from independent populations with equal variances
D. Matched pairs from two dependent populations
6. If the Z statistic (critical value) is used in lieu of the t statistic when comparing two means
from independent populations using small samples, the probability of not rejecting the null
hypothesis __________.
A. Increases
B. Decreases
C. Remains the same
D. Depends on whether the population is normal
7. Given the following information about a hypothesis test of the difference between two means
based on independent random samples, which one of the following is the correct rejection region
at a significance level of .05? Assume that the samples are obtained from normally distributed
populations having equal variances.
H0: A B,
H1: A >B
X 1 = 12, X 2 = 9, s1 = 4, s2=2, n1 = 13, n2 = 10.
A. Reject H0 if Z > 1.96
B. Reject H0 if Z > 1.645
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C. Reject H0 if t > 2.08

D. Reject H0 if t > 1.782
E. Reject H0 if t > 1.721
8. Given the following information about a hypothesis test of the difference between two means
based on independent random samples, what is the standard deviation of the difference between
the two means? Assume that the samples are obtained from normally distributed populations
having equal variances.
H0: A B, and H1: A > B
X 1 = 12, X 2 = 9, s1= 5, s2 = 3, n1 =15, n2 =14.
A. 2.039
B. 1.546
C. 1.792
D. 4.159
E. 2.389
Chapter 12
9. The chi-square goodness of fit is _________ a one-tailed test with the rejection region in the
left tail.
A. Sometimes
B. Always
C. Never
10. Which if any of the following statements about the chi-square test of independence is false?
A. If ri is row total for row i and cj is the column total for column j, then the estimated expected
cell frequency corresponding to row i and column j equals (ri) (cj)/n
B. The test is valid if all of the estimated cell frequencies are at least five
C. The alternative hypothesis states that the two classifications are statistically
independent
D. The chi-square statistic is based on (r-1)(c-1) degrees of freedom where r and c denote,
respectively the number of rows and columns n the contingency table
11. A manufacturing company produces part 2205 for the aerospace industry. This particular part
can be manufactured using 3 different production processes. The management wants to know if
the quality of the units of part 2205 is the same for all three processes. The production supervisor
obtained the following data: The Process 1 had 29 defective units in 240 items; Process 2
produced 12 defective units in 180 items and Process 3 manufactured 9 defective units in 150
items. At a significance level of .05, the management wants to perform a hypothesis test to
determine whether the quality of items produced appears to be independent of the production
process used. What is the rejection point condition for Null hypothesis?
A. Reject H0 if 2 > 0.10257
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B. Reject H0 if 2 > 9.3484

C. Reject H0 if 2 > 7.37776
D. Reject H0 if 2 > 5.99147
E. Reject H0 if 2 > 7.81473
12. A manufacturing company produces part 2205 for the aerospace industry. This particular part
can be manufactured using 3 different production processes. The management wants to know if
the quality of the units of part 2205 is the same for all three processes. The production supervisor
obtained the following data: The Process 1 had 29 defective units in 240 items; Process 2
produced 12 defective units in 180 items and Process 3 manufactured 9 defective units in 150
items. At a significance level of .05, the management wants to perform a hypothesis test to
determine whether the quality of items produced appears to be independent of the production
process used. Calculate the expected number of non-defective units produced by Process 1.
A. 219
B. 211
C. 164
D. 168
E. 137
13. A manufacturing company produces part 2205 for the aerospace industry. This particular part
can be manufactured using 3 different production processes. The management wants to know if
the quality of the units of part 2205 is the same for all three processes. The production supervisor
obtained the following data: The Process 1 had 29 defective units in 240 items; Process 2
produced 12 defective units in 180 items and Process 3 manufactured 9 defective units in 150
items. At a significance level of .05, the management wants to perform a hypothesis test to
determine whether the quality of items produced appears to be independent of the production
process used. Calculate the expected number of defective units produced by Process 3.
A. 21
B. 16
C. 13
D. 9
E. 137
14. A manufacturing company produces part 2205 for the aerospace industry. This particular part
can be manufactured using 3 different production processes. The management wants to know if
the quality of the units of part 2205 is the same for all three processes. The production supervisor
obtained the following data: The Process 1 had 29 defective units in 240 items; Process 2
produced 12 defective units in 180 items and Process 3 manufactured 9 defective units in 150
items.
At a significance level of .05, the management wants to perform a hypothesis test to determine if
the quality of the items produced appears to be independent of the production process used.
6

Based on Chi-square test, we:

A. Reject H0 and conclude that the quality of the product is not the same for all processes
B. Reject H0 and conclude that the quality of the product is dependent on the manufacturing
process
C. Failed to reject H0 and conclude that the quality of the product does not significantly
differ among the three processes
D. Failed to reject H0 and conclude that the quality of the product is not the same for all
processes
E. Reject H0 and conclude that the quality of the product is independent of the manufacturing
process used
Essay Type (show your work) (Four points each) (Show your hypotheses and calculated test
statistics)

Chapter 9
1. The average waiting time per customer at a fast food restaurant has been 7.5 minutes. The
customer waiting time has a normal distribution. The manager claims that the use of a new
cashier system will significantly decrease the average customer waiting time in the store. Based
on a random sample of 25 customer transactions the mean waiting time is 6.22 minutes and the
standard deviation is 2.5 minutes per customer. Test the managers claim at 5% and 1% significa
ANSWER
Ho: 7.5 (managers claim is wrong)
H1 : < 7.5 (managers claim is valid)
X

= 2.5/25 = 0.5

t^

= ( X - 0)/ X

t
=
^

6.22 7.5
0.5

= 2.56

df = 25-1 =24
tc for 5% significance level = 1.711 and 1% significance level = 2.492
We reject the Null hypothesis for both significance levels.

2. In an early study, researchers at an Ivy University found that 30% of the freshmen had
received at least one A in their first semester. Administrators are concerned that grade inflation
has caused this percentage to increase. In a more recent study, of a random sample of 400

freshmen, 136 had at least one A in their first semester Calculate the appropriate test statistic to
test the hypotheses related to the concern and test at 5% and 1%.

ANSWER
Ho: 0.30
H1: > 0.30
n=400, = 0.30, p = 136/400 =0.34
p ={ 0(1- 0)/n}
= (0.30)(0.70)/400 = 0.0229
Z= P- / p
0.34-0.30/ 0.0229 = 1.747
Critical Z for 5% = 1.645 and Critical Z for 1% = 2.326.
So we reject the Null hypothesis at 5%, but do not reject at 1%.
3. A microwave manufacturing company has just switched to a new automated production
system. In the past the company has made a reputation by providing its customers with a
completion time of less than 6 days on average. To analyze whether the mean completion time is
still statistically less than 6 days, the production manager took a sample of 36 jobs and found that
the sample mean completion time was 5.74 days with a sample standard deviation of 1.2 days. At
significance levels of 5% and 10%, test whether the completion time is still less than 6 days.
Indicate which test you are performing; show the hypotheses, the test statistic and the critical
values and mention whether one-tailed or two-tailed.

ANSWER
H0: 6 (sample is acceptable)
H1: >6 (sample is not acceptable) the test is two-tailed.
X = s/n = 1.2/36 = 0.2
t
= ( X - 0)/ X =
^

5.74 6
0.2

= -1.3

df = 36-1 =35
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tc for 10% significance level = 1.306 and 5% significance level = 1.690

So the null hypothesis cant be rejected at both significance levels. So the time is less than 6
days.

Chapter 10
4. At = 0.05 and 0.10, test the hypothesis that the proportion of Consumer (CON) industry
companies winter quarter profit growth is more than 1percentage point greater than the
proportion of Banking (BKG) companies winter quarter profit growth, given that p CON = 0.20,
p BKG = 0.14, nCON = 350, nBKG=400.
ANSWER

( ( 0.2350) ( 0.8 ) )+( ( 0.14400) ( 0.86) ))

p1-p2 = (
=

0.0004571+ 0.000301

p1-p2 = 0.02753
Z=

Z=

( ( P 1P 2 D0 ) )
p 1 p 2

( ( 0.20.14 )0.01 )
0.0275

= 1.8162

Critical Z for 0.10 = 1.28 and Critical Z for 0.05 = 1.645

It is a one tailed critical value will be reject at both 0.10 and 0.05 level, since the calculated
Z is greater

5. The mid-distance running coach, Zdravko Popovich, for the Olympic team of an eastern
European country claims that his six-month training program significantly reduces the average
time to complete a 1500-meter run. Five mid-distance runners were randomly selected before
they were trained with coach Popovich's six-month training program and their completion time
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of 1500-meter run was recorded (in minutes). After six months of training under coach Popovich,
the same five runners' 1500 meter run time was recorded again the results are given below.

At an alpha level of .01, can we conclude that there has been a significant decrease in the mean
time per mile?
ANSWER
H0: d

H1: d > 0
It is a right tailed test.
7.57.1 )+ ( 6.16.2 ) + ( 6.86.5 ) +(8.17.8)

( 5.95.4 )+

d=

0.5+0.40.1+0.3+0.3
d=
5

=1.4/5

d=0.3
2

sd =

d
t=

0.40.3 ) 2+ ( (0.1 ) 0.3 ) + ( 0.30.3 ) + ( 0.30.3 )

( 0.50.3 ) +

0.04 +0.01+0.16+0+ 0
=0.2291
4
=

dD
0
d

sd 0.2291
=
n
5
=

0.1025

0.30
= 2.9268
0.1025

At df= (5-1) = 4 t0.01 = 3.747

t-statistic =3.747 is greater than t-table = 2.9268
Since t statistic is less than t table for t0.01 , so we cannot reject H0 .
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6. Test H0: 1 = 2; H1: 1 2 at = 0.05 and 0.01, when X 1 = 75.6, X 2 = 72, s1 = 3.3, s2 =
2.1, n1 = 6, and n2 = 6. Assume equal variances. Indicate which test you are performing; show the
hypotheses, the test statistic and the critical values and mention whether one-tailed or two-tailed.
ANSWER
H0: 1 =2
H1: 1 2
Sp2 = {(n1-1) S12 + (n2-1) S22}/ ( n1+ n2 2)
Sp2 = [(6-1)(3.3)2 + (6-1)(2.1)2] / (6 +6 -2)
Sp2 = 7.65
X 1X 2 = [Sp2{

1
n1

X 1X 2 = [7.65{

1
6

1 X 2
X
X 1 X 2

75.672
1.597

1
n2
1
6

}]
}]= 1.597

= 2.254

Two-tailed t-value at df= (12-2) = 10 t0.05 = 2.228, t0.01 = 3.169

Therefore, we reject Null e. hypothesis at 5%, but do not reject 1% since the t-table value is
greater than the calculated value.

Chapter 12
7. In the past, of all the students enrolled in "Basic Business Statistics" 12% earned A's 30%
earned B's, 22% earned C's, 26% earned D's and the rest either failed or withdrew from the
course. Dr Johnson is a new professor teaching "Basic Business Statistics" for the first time this
semester. At the conclusion of the semester, in Dr. Johnson's class of 50 students, there were 9
A's, 19 B's, 14 C's, 4 D's and 4 W's or F's. Assume that Dr. Johnson's class constitutes a random
sample. Dr Johnson wants to know if there is sufficient evidence to conclude that the grade
distribution of his class is different than the historical grade distribution.
Use =.0
ANSWER
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The df =4, and 2.05,4=9.49. and 2.01,4 = 13.28. Reject if calculated 2 exceeds these values
feA=(0.12)(50)=6 ,feB=(0.3)(50)=15 , feC=(0.22)(50)=11, feD=(0.26)(50)=13 ,feF,W=(0.26)(50)=5

Fo

Fe

fo fe

(fo fe)2

(fo fe)2/ fe

1.5

19

15

16

1.07

14

11

0.82

13

-9

81

6.23

-1

0.2

50

50

9.82

2 =9.82
Reject H0 at .05 if 2 > 9.49
It appears that the grade distribution of Dr. Johnson's class is different (higher grades)
than the historical course grade distribution.
Cannot Reject H0 at .01 if 2 < 13.28
It appears that the grade distribution of Dr. Johnson's class is not different (lower grades)
than the historical course grade distribution.

8. A recent national survey of hospital admissions for people between 25 and 50 years who had
hospital admissions in during a two years period showed that 30% had 1 admission only, 25%
had two admissions, 15% had 3 admissions, 12% had 4 admissions, 8 % had 5 admissions, 10%
had 6 admissions or more admissions. The mayor of a small city claims that his city is much
healthier than the national average. He even cites the percentages for the two extreme categories.
12

His claim was in fact based on a sample of 300 randomly selected people in the specified age
group who were interviewed by a local Newspaper. It was revealed that 114 people had only 1
admission, 84 had 2 admissions, 47 had 3 admissions, 24 had 4 admissions, 15 had 5 admissions,
and 16 had 6 admissions or more admissions. Does the data support the mayors claim?
ANSWER
Fe1= (0.3)(300)=90 ,Fe2= (0.25)(300)=75 ,Fe3= (0.15)(300)=45, Fe4= (0.12)(300)=36
Fe5= (0.08)(300)=24, Fe6= (0.10)(300)=30

Admissio
n

Nationa
l (%)

fo

Fe

fo fe

(fo fe)2

(fo fe)2/
fe

30

11
4

90

24

576

6.4

25

84

75

81

1.08

15

47

45

0.09

12

24

36

-12

144

4.00

15

24

-9

81

3.38

10

16

30

-14

196

6.53

TOTAL

300

30
0

21.48

2 =21.48
The calculated test statistic is 21.48 and the degree of freedom is 6-1 = 5.
For this df the table gives 2.10 =15.09 and 2.05 =11.07. Thus the Null hypothesis is rejected,
since the calculated test statistics is greater than the table test given at both 5% and 1%.
Therefore the data supports the Majors claim.

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