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Jan 9, 2024

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ECO 45 – 011 – Statistical Methods Felipe A. Araujo Spring, 2022 Problem set # 10 (due on May 3, 2021 @ 12:10pm) 1. The US ranks ninth in the world in per capita chocolate consumption; Forbes reports that the average American eats 9.5 pounds of chocolate annually. A sample of 36 individuals from Hershey-PA showed a sample mean annual consumption of 10.05 pounds and a standard deviation of ࠵? = 1.5 pounds. Using ࠵? = 0.05 , can you conclude that chocolate consumption is higher in Hershey-PA compared to the rest of the country? 2. The mean annual premium for car insurance in the US was $1503 in March 2014. You suspect that the car insurance premiums in California are lower, on average, than in the US. A sample of 25 car insurance policies from the state of California showed an annual premium of $1440 with a standard deviation of ࠵? = $ 165 . a. Write the appropriate null and alternative hypotheses. b. What is the point estimate for the difference between the mean annual premium in California and the national mean? c. At the 5% significance level, do you have enough evidence to reject the null? 3. The US Bureau of Labor Statistics reports that 11.3% if US workers belonged to unions in 2013. A sample of 400 workers was collected in 2018 to determine whether union efforts to organize have increased union membership. a. Formulate the null and alternative hypotheses. b. If the sample results show that 52 of the workers belonged to unions, what is the p-value for your hypothesis test? c. Using a 5% significance level, what is your conclusion? d. What is the minimum number of unionized workers on your sample that you lead you to reject the null hypothesis at the 5% significance level? 4. A consumer research group is interested in testing an automobile manufacturer’s claim that a new economy model will travel at least 25 miles per gallon of gasoline. That is, the null hypothesis is ࠵? ! : ࠵? ≥ 25 . a. With a 0.02 level of significance and a sample of 30 cars, what is the rejection rule based on the value of the sample mean ࠵?̅ for the test to determine whether the manufacturer’s claim should be rejected? Assume that ࠵? , the population standard deviation, is 3 miles per gallon. b. What is the probability of committing a Type II error if the actual mileage is 23 miles per gallon? c. What is the probability of committing a Type II error if the actual mileage is 24 miles per gallon?
d. What is the probability of committing a Type II error if the actual mileage is 25.5 miles per gallon? e. What happens to the power of the statistical test when we go from (a) to (b) to (c)? Explain why using your own words. 5. A special industrial battery must have a life of at least 400 hours. A hypothesis test is to be conducted with a 0.02 level of significance. If the batteries on this production batch have an actual use life of 385 hours, the manager wants a sampling procedure that only 10% of the time would show erroneously that the batch is acceptable. What sample size is recommended for the hypothesis test? Use 30 hours as an estimate for the population standard deviation. 6. Young Adult magazine states the following hypothesis about the mean age if its subscribers: ࠵? ! : ࠵? = 28 ࠵? " : ࠵? ≠ 28 a. What would it mean to make a Type II error in this situation? b. The population standard deviation is assumed known at ࠵? = 6 years, and the sample size is 100. With ࠵? = 0.05 , what is the probability of accepting the null hypothesis for (i) ࠵? = 25 , (ii) ࠵? = 26 , (iii) ࠵? = 27 , and (iv) ࠵? = 27.75 . c. What is the power of the test if ࠵? = 27 ?
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