Chapter 3.7, Problem 11EQ

A health policy economist interested in investigating the relationship between the cost of prescription drugs in Canada and the cost of prescription drugs in the United States has information from a random sample of 48 prescription drugs sold in both countries. For each of these drugs, the economist is examining two pieces of information: the average cost of a one-month supply of the drug in Canada, and the average cost of a one-month supply of the drug in the United States. For the sample of drugs examined, the sample correlation coefficient r relating these two pieces of information is 0.33. Test for a significant linear relationship between the two variables average prescription drug cost in Canada and average prescription drug cost in the United States by doing a hypothesis test regarding the population correlation coefficient p. (Assume that the two variables have a bivariate normal distribution.) Use the 0.05 level of significance, and perform a two-tailed test. Then complete the…

A study of pine nut crops in the American southwest from 1940 to 1947 hypothised that nut production followed a Markov chain. The data suggested that if one year's crop was good, then the probabilities that the following year's crop would be good, fair, or poor were 0.08, 0.07, and 0.85, respectively; if one year's crop was fair, then the probabilities that the follow-ing year's crop would be good, fair, or poor were 0.09, 0.11, and 0.80, respectively; if one year's crop was poor, then the probabilities that the following year's crop would be good, fair, or poor were 0.11, 0.05, and 0.84, respectively. (a) Write down the transition matrix for this Markov chain. (b) If the pine nut crop was good in 1940, find the probabilities of a good crop in the years 1941 through 1945. (c) In the long run, what proportion of the crops will be good, fair, and poor

More and more households are struggling to pay utility bills given high heating costs. Particularly hard hit are households with homes heated with propane or heating oil. Many of these households are spending twice as much to stay warm this winter compared to those who heat with natural gas or electricity. A representative sample of 500 households was taken to investigate if the type of heating influences whether or not a household is delinquent in paying its utility bill. The following table reports the results. (see image attached) a. What is the probability that a randomly selected household uses heating oil?  b. What is the probability that a randomly selected household is delinquent in paying its utility bill? c. What is the probability that a randomly selected household uses heating oil and is delinquent in paying its utility bill? d. Given that a household uses heating oil, what is the probability that it is delinquent in paying its utility bill? e. Given that a household is…