Qm1 Assignment Unimelb

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ECON10005 QUANTITATIVE METHODS 1 Assignment 2 Semester 1, 2013 This assignment has four questions, and is due by 5.00pm on Thursday 2 May. It is to be submitted electronically as a .pdf file using the assignment tool on the subject’s LMS page. Marks depend on your tutor being able to understand your statements and arguments, so marks may be deducted for poor presentation or unclear language. Use nothing smaller than 12 point font. If you wish to write your assignment by hand and scan the file into a .pdf format, you may, though any illegible content will not be marked. You may work in groups of up to 4 students from the same allocated tutorial. Groups should nominate one student to submit the assignment for the whole group, with each…show more content…
How can you explain to the farmer that it is possible to draw these two different conclusions from the same data? (2 marks) (f) Calculate the p-value for the hypothesis tests in parts (b) and (d). How might knowing this value improve the explanation given to the farmer in part (e)? (4 marks) Hint: Think about the definition of the p-value and how this might let you provide a more concise and specific response to the farmer’s concerns Question 3 (6 marks) You are considering entering the market for bikes as a seller. If your bikes are of higher quality than the average bike already in the market for bikes, you will make a 2 profit by entering that market. If your bikes are not of higher quality than the average bike already in the market, you will make a loss by entering the market for bikes. You test, at the 5% level of significance, the hypothesis that the quality of your bikes exceeds the average quality of existing bikes in the market. Given this information, answer the following questions. (a) What would a Type I Error be in the context of this case? Explain what the consequences of a Type I Error would be. (2 marks) (b) What would a Type II Error be in the context of this case? Explain what the consequences of a Type II Error would be. (2 marks) (c) After conducting the test, you conclude that there is sufficient evidence in the data you observe to support the alternative hypothesis that

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