HOMEWORK CHAPTER 6

Problem 1

The American League consists of 15 baseball teams. Suppose a sample of 5 teams is to be selected
to conduct player interviews. The following table lists the 15 teams and the random numbers
assigned by Excel’s RAND function. Use these random numbers to select a sample of size 5

Team Random Team Random

number number
New York 0.178624 Boston 0.290197
Baltimore 0.578370 Tampa Bay 0.867778
Toronto 0.965807 Minnesota 0.811810
Chicago 0.562178 Cleveland 0.960271
Dotroit 0.253574 Kansas City 0.326836
Oakland 0.288287 Los Angeles 0.895267
Texas 0.500879 Seattle 0.839071
Houston 0.713682

Team Random
number
New York 0.178624
Dotroit 0.253574
Oakland 0.288287
Boston 0.290197
Kansas City 0.326836
Texas 0.500879
Chicago 0.562178
Baltimore 0.57837
Houston 0.713682
Minnesota 0.811810
Seattle 0.839071
Tampa Bay 0.867778
Los Angeles 0.895267
Cleveland 0.960271
Toronto 0.965807

First we arrange these teams with increasing order of random numbers.

Then, we select here first 5 teams .
These teams are New York,Detroit,Oakland,Boston,Kansas City.

Problem 2

The U.S. Golf Association is considering a ban on long and belly putters. This has caused a great deal
of controversy among both amateur golfers and members of the Professional Golf Association
(PGA). Shown below are the names of the top 10 finish-ers in the recent PGA Tour McGladrey
Classic golf tournament.

1. Tommy Gainey 6. Davis Love III

2. David Toms 7. Chad Camphell
3. Jim Furyk 8. Greg Owens
4. Bredon de Jonge 9. Charles Howell III
 5. D.J. Trahan 10. Arjun Atwal

Select a simple random sample of 3 of these players to assess their opinions on the use of long and
belly putters.

Use below formula in excel = RANDBETWEEN(bottom,top)

Using this formula we get random number as 4,1,10
Hence sample will include 4. Brendon de Jonge, 1. Tommy Gainey & 10. Arun Atwal

Problem 3

A simple random sample of 5 months of sales data provided the following information:

Month 1 2 3 4 5
Units Sold 94 100 85 94 92

a. Develop a point estimate of the population mean number of units sold per month.
b. Develop a point estimate of the population standard deviation.

a.

The point estimate of the population mean number of units sold per month is

94 + 100 + 85 + 94 + 92
= 93
5

b.

The point estimate of the population standard deviation.

√(94 - 93)^2 + (100 - 93)^2 + (85 - 93)^2 + (94 - 93)^2 + (92 -

93)^2 / 5 -1

= 5.39

Problem 4

Morningstar publishes ratings data on 1,208 company stocks. A sample of 40 of these stocks is
contained in the file named Morningstar. Use the Morningstar data set to answer the following
questions.
a. Develop a point estimate of the proportion of the stocks that receive Morningstar’s highest rating
of 5 Stars.
b. Develop a point estimate of the proportion of the Morningstar stocks that are rated Above
Average with respect to business risk.
c. Develop a point estimate of the proportion of the Morningstar stocks that are rated 2 Stars or
less.

Company Morning star Company Morning star

rating rating
1 Star Very
Ameren Corp 1 Star High Hess Corp Low
 Apple Inc 2 Star Low Icon PLC 5 Star High

5 Star Very International

At&T Inc Low Flavors & 1 Star High
Fragrances
Bank of New John Wiley &
York Mellon Corp 3 Star Very Low Sons, Inc. 5 Star High
Life
BlackRock Inc 1 Star High Technologies 3 Star High
corp
Buckeye 3 Star Very Marvell
Partners Low Technology 4 Star High
Group, Ltd.
Cardinal Health Methanex
Inc 5 Star Very Low Corporation 5 Star Average

1 Star Very
CenturyLink Inc Low Mylan Inc 5 Star High

Cintas New York 3 Star Very

Corporation 5 Star High Times Low
Company
Colgate-
Palmolive 3 Star Low OfficeMax Inc 2 Star High
Company
Owens- 3 Star Very
Corning Inc 2 Star High Corning, Inc. Low

Darden 5 Star Very Polaris 4 Star Very

Restaurants Inc Low Industries, Inc. Low

Discover
Financial 5 Star Average Rio Tinto PLC 2 Star High
Services
5 Star Very 2 Star Very
eBay Inc Low Sempra Energy Low

Endo Health Stifel Financial 3 Star Very

Solutions 1 Star High Corp. Low

Texas 5 Star Very

Fair Isaaac Corp 4 Star High Instruments, Low
Inc.

5 Star Very United

Fluor Corp Low Technologies 5 Star High
Corp
Weight
Gentex Watchers
Corporation 5 Star Low International, 4 Star High
Inc.
Group 1 3 Star Very WR Berkley
Automotive Inc Low Corp 4 Star Low

Yum Brands Inc 3 Star Average

Rating Number of
stocks
1 star 6
2 star 5
 3 star 8
4 star 6
4 star 15
Total 40

a.

Number of stocks that received morningstar highest rating of 5 stars = 5

Point estimate of Propertion of the stocks that received morning highest rating of 5 stars

5
= 0.125
40

b.

Number of stocks that received morning star rating low = 20

Point estimate of propertion of the morningstar stock that are rated low with respect to business
risk

20
= 0.50
40

c.

Number of stocks that are rated 3 star or less = 19

Point estimate of propertion of the morningstar stocks that are rated 3 star or less

19
= 0.475
40

Problem 5

One of the questions in the Pew Internet & American Life Project asked adults if they used the
Internet at least occasionally. The results showed that 454 out of 478 adults aged 18–29 answered
Yes; 741 out of 833 adults aged 30–49 answered Yes; and 1,058 out of 1,644 adults aged 50 and
over answered Yes.

a. Develop a point estimate of the proportion of adults aged 18–29 who use the Internet.
b. Develop a point estimate of the proportion of adults aged 30–49 who use the Internet.
c. Develop a point estimate of the proportion of adults aged 50 and over who use the Internet.
d. Comment on any apparent relationship between age and Internet use.
e. Suppose your target population of interest is that of all adults (18 years of age and over). Develop
an estimate of the proportion of that population who use the Internet.

a.

The point estimate of the proportion of adults aged 18–29 who use the Internet.
 454
0.9498
478

b.

The point estimate of the proportion of adults aged 30–49 who use the Internet.

741
0.8896
833

c.

The point estimate of the proportion of adults aged 50 and over who use the Internet.

1058
0.6436
1644

e.

The point estimate of the proportion of all adults (18 years of age and over) who use the Internet.

454 + 741 +
1058
= 0.7624
478 + 833 +
1644

Problem 6

In this chapter we showed how a simple random sample of 30 EAI employees can be used to
develop point estimates of the population mean annual salary, the population standard deviation
for annual salary, and the population proportion having completed the management training
program.
a. Use Excel to select a simple random sample of 50 EAI employees.
b. Develop a point estimate of the mean annual salary.
c. Develop a point estimate of the population standard deviation for annual salary.
d. Develop a point estimate of the population proportion having completed the man-agement
training program.

a.
b.

c.

d.
Problem 7

The College Board reported the following mean scores for the three parts of the SAT: Assume that
the population standard deviation on each part of the test is σ = 100.

Critical Reading 502

Mathematics 515
Writing 494

a. For a random sample of 30 test takers, what is the sampling distribution of x for scores on the
Critical Reading part of the test?
b. For a random sample of 60 test takers, what is the sampling distribution of x for scores on the
Mathematics part of the test?
c. For a random sample of 90 test takers, what is the sampling distribution of x for scores on the
Writing part of the test?

a.

The standard deviation of x for scores on the Critical Reading part of the test is:

b.

The standard deviation of x for scores on the Mathematics part of the test is:

c.

The standard deviation of x for scores on the Writing part of the test is

Problem 8

For the year 2010, 33% of taxpayers with adjusted gross incomes between $30,000 and $60,000
itemized deductions on their federal income tax return. The mean amount of deductions for this
population of taxpayers was $16,642. Assume that the standard deviation is σ = $2,400

a. What are the sampling distributions of x for itemized deductions for this population of taxpayers
for each of the following sample sizes: 30, 50, 100, and 400?
b. What is the advantage of a larger sample size when attempting to estimate the population mean?
 population of taxpayers was $16,642. Assume that the standard deviation is σ = $2,400

a. What are the sampling distributions of x for itemized deductions for this population of taxpayers
for each of the following sample sizes: 30, 50, 100, and 400?
b. What is the advantage of a larger sample size when attempting to estimate the population mean?

a.

It is given that
Population mean (μ) = $16.642
Population standard deviation σ = $2,400

The sampling distribution of X- has mean = $16.642

For n = 30
The sampling distribution of X- has standard deviation

= 438.18

For n = 50
The sampling distribution of X- has standard deviation

= 339.41

For n = 100
The sampling distribution of X- has standard deviation

= 240

For n = 400
The sampling distribution of X- has standard deviation

= 120

b.
A larger sample has a higher probability that the sample mean will be closer to the population
mean.

Problem 9

The Economic Policy Institute periodically issues reports on wages of entry-level workers. The
institute reported that entry-level wages for male college graduates were $21.68 per hour and for
female college graduates were $18.80 per hour in 2011. Assume that the standard deviation for
male graduates is $2.30 and for female graduates it is $2.05.

a. What is the sampling distribution of x for a random sample of 50 male college graduates?
b. What is the sampling distribution of x for a random sample of 50 female college graduates?
c. In which of the preceding two cases, part (a) or part (b), is the standard error of xsmaller? Why?

a.

Standard error of mean = σ / √n = $2.30 / sqrt(50) = 0.3253

 For a sample mean within $.50 of population mean $21.68, the mean should lie between $21.68 -
0.50 and $21.68 + 0.50 or between $21.18 and $22.18

Z value for $21.18 = (21.18 - 21.68) / 0.3253 = -1.54

Z value for $22.18 = (22.18 - 21.68) / 0.3253 = 1.54

So, P(21.18 < X < 22.18) = P(-1.54 < Z < 1.54) = P(Z < 1.54) - P(Z < -1.54)

b.

Standard error of mean = σ / √n = $2.05 / sqrt(50) = 0.29

For a sample mean within $.50 of population mean $18.80, the mean should lie between $18.80 -
0.50 and $18.80+ 0.50 or between $18.30 and $19.30

Z value for $18.30 = (18.30 - 18.80) / 0.29 = -1.72

Z value for $19.30 = (19.30 - 18.80) / 0.29 = 1.72

So, P(18.30 < X < 19.30) = P(-1.72 < Z < 1.72) = P(Z < 1.72) - P(Z < -1.72)

c.

From part (a) and (b), we can see that sample of female graduates have a higher probability of
obtaining a sample estimate within $.50 of the population mean.
Because the standard error for female graduates is lower than the standard error for male
graduates.

d.

Standard error of mean = σ / √n = $2.05 / sqrt(120) = 0.1871

For a sample mean more than $.30 below population mean $18.80, the mean should be more than
$18.80 - 0.30 = $18.50
Z value for $18.50 = (18.50 - 18.80) / 0.1871 = -1.60

So, P(X > 18.50) = P(Z > -1.60) = 0.9452

Problem 10

The state of California has a mean annual rainfall of 22 inches, whereas the state of New York has a
mean annual rainfall of 42 inches. Assume that the standard deviation for both states is 7 inches. A
sample of 30 years of rainfall for California and a sample of 45 years of rainfall for New York has
been taken.
a. Show the sampling distribution of the sample mean annual rainfall for California.
b. Show the sampling distribution of the sample mean annual rainfall for New York.
c. In which of the preceding two cases, part (a) or part (b), is the standard error of x- smaller? Why?
 Sample cà ng lớ n-> stdv cà ng nhỏ
Problem 11

The president of Doerman Distributors, Inc. believes that 30% of the firm’s orders come from first-
time customers. A random sample of 100 orders will be used to estimate the proportion of first-
time customers. Assume that the president is correct and p = 0.30. What is the sampling
distribution of p- for this study?

Given that sample size n = 100

Proportion of firm's orders come from first - time customers p = 0.30

A normal distribution because np and n (1-p) are both greater than 10

Normal distribution with p = 0.30 and standard deviation:

= 0.0458

Problem 12
The Wall Street Journal reported that the age at first startup for 55% of entrepreneurs was 29
years of age or less and the age at first startup for 45% of entrepreneurs was 30 years of age or
 years of age or less and the age at first startup for 45% of entrepreneurs was 30 years of age or
more.

a. Suppose a sample of 200 entrepreneurs will be taken to learn about the most import-ant
qualities of entrepreneurs. Show the sampling distribution of p- where p- is the sample proportion
of entrepreneurs whose first startup was at 29 years of age or less.
b. Suppose a sample of 200 entrepreneurs will be taken to learn about the most import-ant
qualities of entrepreneurs. Show the sampling distribution of p- where p- is now the sample
proportion of entrepreneurs whose first startup was at 30 years of age or more.
c. Are the standard errors of the sampling distributions different in parts (a) and (b)?
a.

The sampling distribution of p- where p- is the sample proportion of entrepreneurs whose first
starup was at 29 years of age or less:

n * p = 200 * 0.55 = 110

n * (1 - p) = 90
E (p) = p = 0.55

= 0.0352

b.

The sampling distribution of p- where p- is the sample proportion of entrepreneurs whose first
starup was at 30 years of age or less:

n * p = 200 * 0.45 = 90
n * (1 - p) = 110
E (p) = p = 0.45

= 0.0352

c.

There is no different in the standard errors of the sampling distributions.

Problem 13

People end up tossing 12% of what they buy at the grocery store. Assume this is the true
population proportion and that you plan to take a sample survey of 540 grocery shoppers to
further investigate their behavior. Show the sampling distribution of p, the proportion of groceries
thrown out by your sample respondents.

Given that
p = 12% = 0.12
n = 540

The sampling distribution of sample proportion p^ is approximately normal with:

Mean: p = 0.12
 Standard deviation:

= 0.014

Problem 14

Forty-two percent of primary care doctors think their patients receive unnecessary medical care.
a. Suppose a sample of 300 primary care doctors was taken. Show the distribution of the sample
proportion of doctors who think their patients receive unnecessary medical care.
b. Suppose a sample of 500 primary care doctors was taken. Show the distribution of the sample
proportion of doctors who think their patients receive unnecessary medical care.
c. Suppose a sample of 1,000 primary care doctors was taken. Show the distribution of the sample
proportion of doctors who think their patients receive unnecessary medical care.
d. In which of the preceding three cases, part (a) or part (b) or part (c), is the standard error of p
smallest? Why?
 d.

Standard error is smallest in part c because p is same in part a, b and c and the sample size is
largest in part c

Problem 15

The International Air Transport Association surveys business travelers to develop quality ratings
for transatlantic gateway airports. The maximum possible rating is 10.
Suppose a simple random sample of 50 business travelers is selected and each traveler is asked to
provide a rating for the Miami International Airport. The ratings obtained from the sample of 50
business travelers follow.

Develop a 95% confidence interval estimate of the population mean rating for Miami.

The mean of the sample data is:

6.34

Mean 6.45
=(Mean-μ) /
mo 5.5 t 3.012 standard error
standard error 0.314 p-value 0.0021 < 5% -> Reject Ho
n 47 Two-tailed 0.00421
The standard deviation of the sample is:

= 2.163

Since the sample size is large (50), use z-statistic in constructing the confidence interval.
The two-tailed critical value of the z at: α = 1 - 0.95 = 0.05
Level of significance is:

(using excel function = normsinv(0.95+(0.05/2)))

OR

The 95% confidence interval for the population mean rating of Miami is (5.74, 6.94)
With 95% confidence it can be concluded that the population mean rating of Miami lies between
5.74 and 6.94.
Problem 16

A sample containing years to maturity and yield for 40 corporate bonds is contained in the file
named CorporateBonds.
a. What is the sample mean years to maturity for corporate bonds and what is the sample standard
deviation?
b. Develop a 95% confidence interval for the population mean years to maturity.
c. What is the sample mean yield on corporate bonds and what is the sample standard deviation?
d. Develop a 95% confidence interval for the population mean yield on corporate bond

Years to Years to
Company ticket maturity Yeild Company ticket maturity Yeild
HSBC 12.00 4.079 FCX 10 4.03
GS 9.75 5.367 GS 25.5 6.913
C 4.75 3.332 RABOBK 4.75 2.805
MS 9.25 5.798 GE 26.75 5.138
C 9.75 4.414 HCN 7 4.184
TOTAL 5.00 2.069 GE 9.5 3.778
MS 5.00 4.739 VOD 5 1.855
WFC 10.00 3.682 NEM 10 3.866
TOTAL 10 3.27 GE 1 0.767
TOTAL 3.25 1.748 C 25.75 8.204
BAC 9.75 4.949 SHBASS 5 2.861
RABOBK 9.75 4.203 PAA 10.25 3.856
GS 9.25 5.365 GS 3.75 3.558
AXP 5 2.181 TOTAL 1.75 1.378
MTNA 5 4.366 MS 4 4.413
MTNA 10 6.046 WFC 1.25 0.797
JPM 4.25 2.31 AIG 5 3.452
GE 26 5.13 BAC 29.75 5.903
LNC 10 4.163 MS 1 1.816
BAC 5 3.699 T 28.5 4.93
Problem 17

Health insurers are beginning to offer telemedicine services online that replace the common office
visit. WellPoint provides a video service that allows subscribers to con-nect with a physician online
and receive prescribed treatments. Wellpoint claims that users of its LiveHealth Online service
 and receive prescribed treatments. Wellpoint claims that users of its LiveHealth Online service
saved a significant amount of money on a typical visit. The data shown below ($), for a sample of 20
online doctor visits, are consistent with the savings per visit reported by Wellpoint

92 34 40
105 83 55
56 49 40
76 48 96
93 74 73
78 93 100
53 82

Assuming that the population is roughly symmetric, construct a 95% confidence inter-val for the
mean savings for a televisit to the doctor as opposed to an office visit.

The mean is: 71

The standard deviation is: 22.35

On an average, the mean savings for a televisit to the doctor, as opposed to an office visit for the
provided sample is 71. The standard deviation is 22.35 which indicates that the variation in the
sample about the mean is 22.35.

The degree of freedom is calculated as: (n - 1) = 20 - 1 = 19

The level of significance is calculated as: α = 1 - 0.95 = 0.05

The value of is:

The value is obtained from the standard t distribution table.

The confidence interval for mean can be calculated as:

The confidence interval for the mean savings is (60.540, 81.460)

The confidence interval indicates that there is 95% chance that the mean savings for a televisit to
the doctor, as opposed to an office visit will lie within the interval (60.540, 81.460).

Problem 18
The average annual premium for automobile insurance in the United States is $1,503. The
following annual premiums ($) are representative of the web site’s findings for the state of
Michigan.

1,905 3,112 2,312

2,725 2,545 2,981
2,677 2,525 2,627
2,600 2,370 2,857
2,962 2,545 2,675
2,184 2,529 2,115
 2,332 2,442

Assume the population is approximately normal.

a. Provide a point estimate of the mean annual automobile insurance premium in Michigan.
b. Develop a 95% confidence interval for the mean annual automobile insurance pre-mium in
Michigan.
c. Does the 95% confidence interval for the annual automobile insurance premium in Michigan
include the national average for the United States? What is your inter-pretation of the relationship
between auto insurance premiums in Michigan and the national average?
Problem 19

One of the questions on a survey of 1,000 adults asked if today’s children will be better off than
their parents. Representative data are shown in the file named ChildOutlook. A response of Yes
indicates that the adult surveyed did think today’s children will be better off than their parents. A
response of No indicates that the adult surveyed did not think today’s children will be better off
than their parents. A response of Not Sure was given by 23% of the adults surveyed.
a. What is the point estimate of the proportion of the population of adults who do think that today’s
children will be better off than their parents?
b. At 95% confidence, what is the margin of error?
c. What is the 95% confidence interval for the proportion of adults who do think that today’s
children will be better off than their parents?
d. What is the 95% confidence interval for the proportion of adults who do not think that today’s
children will be better off than their parents?
e. Which of the confidence intervals in parts (c) and (d) has the smaller margin of error? Why?

a.

Given, sample proportion p^ = x/n = 240/1000 = 0.24

Point estimate = 0.24

b.

Here at 95% CI, z value = 1.96

Consider, Margin of error = z*sqrt(p^(1-p^)/n)

Substitute values = 1.96*sqrt(0.24(1-0.24)/1000) = 0.0265

c.

Here at 95% CI, z value = 1.96

Consider, Interval = p^ +/- z*sqrt(p^(1-p^)/n)

Substitute values = 0.24 +/- 1.96*sqrt(0.24(1-0.24)/1000) = 0.24 +/- 0.0265 = (0.2135 , 0.2665)

d.

p^ = 530/1000 = 0.53

Here at 95% CI, z value = 1.96

Consider, Interval = p^ +/- z*sqrt(p^(1-p^)/n)

Substitute values = 0.53 +/- 1.96*sqrt(0.53(1-0.53)/1000) = 0.53 +/- 0.0309 = (0.4991 , 0.5609)

e.
Here we observe , the margin of error for part (c) is smaller than part (d).
Problem 20

According to Thomson Financial, last year the majority of companies reporting profits had beaten
estimates. A sample of 162 companies showed that 104 beat estimates, 29 matched estimates, and
29 fell short.
a. What is the point estimate of the proportion that fell short of estimates?
b. Determine the margin of error and provide a 95% confidence interval for the pro-portion that
beat estimates.
c. How large a sample is needed if the desired margin of error is 0.05?

a.

Number of Items of Interest, x = 29

Sample Size, n = 162

Sample Proportion , p̂ = x/n = 0.179

b.

Number of Items of Interest, x = 94

Sample Size, n = 162
Sample Proportion , p̂ = x/n = 0.5802

Level of Significance, α = 0.05

z -value = Zα/2 = 1.960 [excel formula =NORMSINV(α/2)]
Standard Error , SE = z* √[p̂ ^(1-p̂ ^)/n] = 0.076048
Margin of error , MOE = Z * SE = 1.96 * 0.076048= 0.059034

Confidence Interval is:

Interval Lower Limit = p̂ - MOE = 0.5802-0.059034= 0.521
Interval Upper Limit = p̂ + MOE = 0.5802+0.059034= 0.639

95% Confidence interval is ( 0.521 < p < 0.639 )

c.

Sample proportion , p̂ = 0.5802

Sampling error , E = 0.05
Confidence Level , CL= 0.95

α = 1-CL = 0.05
Z value = Zα/2 = 1.960 [excel formula =normsinv(α/2)]

Sample Size, n = (Z/E)² * p̂ * (1-p̂ )= (1.96/0.05)² * 0.5802* (1-0.5802)= 374.2509

So, Sample Size required = 375

Problem 21
The Pew Research Center Internet Project conducted a survey of 857 Internet users. This survey
provided a variety of statistics on them.
a. The sample survey showed that 90% of respondents said the Internet has been a good thing for
them personally. Develop a 95% confidence interval for the propor-tion of respondents who say
the Internet has been a good thing for them personally.
 the Internet has been a good thing for them personally.
b. The sample survey showed that 67% of Internet users said the Internet has generally
strengthened their relationship with family and friends. Develop a 95% confidence interval for the
proportion of respondents who say the Internet has strengthened their relationship with family
and friends.
c. Fifty-six percent of Internet users have seen an online group come together to help a person or
community solve a problem, whereas only 25% have left an online group because of unpleasant
interaction. Develop a 95% confidence interval for the pro-portion of Internet users who say online
groups have helped solve a problem.
d. Compare the margin of error for the interval estimates in parts (a), (b), and (c). How is the
margin of error related to the sample proportion?

Problem 22

For many years businesses have struggled with the rising cost of health care. But recently, the
increases have slowed due to less inflation in health care prices and employees paying for a larger
portion of health care benefits. A recent Mercer survey showed that 52% of U.S. employers were
likely to require higher employee contribu-tions for health care coverage. Suppose the survey was
based on a sample of 800 com-panies. Compute the margin of error and a 95% confidence interval
for the proportion of companies likely to require higher employee contributions for health care
coverage.
Problem 23

The manager of the Danvers-Hilton Resort Hotel stated that the mean guest bill for a weekend is
$600 or less. A member of the hotel’s accounting staff noticed that the total charges for guest bills
have been increasing in recent months. The accountant will use a sample of future weekend guest
bills to test the manager’s claim.
a. Which form of the hypotheses should be used to test the manager’s claim? Explain.

b. What conclusion is appropriate when H0 cannot be rejected?

c. What conclusion is appropriate when H0 can be rejected?

a.

b.

If the null hypothesis is not rejected then the claim of the manager is true.

c.

If the null hypothesis is rejected then it means alternative hypothesis is true so there is enough
evidence to conclude that claim of the manager is not true.

Problem 24

The manager of an automobile dealership is considering a new bonus plan designed to increase
sales volume. Currently, the mean sales volume is 14 automobiles per month. The manager wants
to conduct a research study to see whether the new bonus plan increases sales volume. To collect
data on the plan, a sample of sales personnel will be allowed to sell under the new bonus plan for a
one-month period.
a. Develop the null and alternative hypotheses most appropriate for this situation.
b. Comment on the conclusion when H0 cannot be rejected.c.Comment on the conclusion when H0
can be rejected
 Note: The type I error is the probability of rejecting the null hypothesis when it is true. The type II
error is the probability of failing to reject the null hypothesis when it is false. Both are inversely
proportional to each other.

a.

The null and alternative hypotheses:

b.

The conclusion when Ho cannot be rejected.

In this case, the test statistic calculated from the sample is less than the critical value at a given
significance level, and so, for this right-tailed test, it is outside the rejection region.

Thus, there is not enough evidence to say that the new bonus plan has increased the sales volume.
As the null hypothesis is not rejected so there are chances of making a Type II error.

c.

The conclusion when Ho can be rejected.

In this case, the test statistic calculated from the sample is greater than the critical value, and so it
is in the rejection region.

There is enough evidence to say that the new bonus plan has increased the sales volume. As the
null hypothesis is rejected so there are chances of making a Type I error.

Problem 25

A production line operation is designed to fill cartons with laundry detergent to a mean weight of
32 ounces. A sample of cartons is periodically selected and weighed to determine whether
underfilling or overfilling is occurring. If the sample data lead to a conclusion of underfilling or
overfilling, the production line will be shut down and adjusted to obtain proper filling.
a. Formulate the null and alternative hypotheses that will help in deciding whether to shut down
and adjust the production line.
b. Comment on the conclusion and the decision when H0 cannot be rejected.
c. Comment on the conclusion and the decision when H0 can be rejected

a.

The formulation of the null and alternative hypotheses that will help in deciding whether to shut
down and adjust the production line,
Since either under or over-filling is unaccepted, the test doesn't have a specific direction; it is a
two-tailed test. The hypotheses are:

In words:
The null hypothesis: The mean weight of the cartons is equal to 32 ounces
The alternative hypothesis: The mean weight of the cartons is different from 32 ounces

In symbols:
Ho: μ = 32
Ha: μ ≠ 32
 b.

In the case when the null hypothesis cannot be rejected:

Conclusion: There is no evidence to say that the mean is different from 32 ounces.
Decision: The production will not be shut down and the production line will remain in continuity
with the current setting.

c.

In the case when the null hypothesis can be rejected:

Conclusion: There is sufficient evidence to say that the mean is different from 32 ounces.
Decision: The production will be shut down and the production line will be adjusted to obtain the
proper filling.

Problem 26

Because of high production-changeover time and costs, a director of manufacturing must convince
management that a proposed manufacturing method reduces costs before the new method can be
implemented. The current production method operates with a mean cost of $220 per hour. A
research study will measure the cost of the new method over a sample production period.
a. Develop the null and alternative hypotheses most appropriate for this study.
b. Comment on the conclusion when Ho cannot be rejected.
c. Comment on the conclusion when Ho can be rejected.

a.

In this situation, observe that the researcher tests that the new method will operates with a mean
cost less than $220.
That is, μ < 220
The Null and Alternative hypothesis is as follows:
Null hypothesis, Ho : the new method will operate with a mean cost is not less than $220.
That is, Ho : μ ≥ 220
Alternative hypothesis, Ha : the new method will operate with a mean cost is less than $220.
That is, Ho : μ < 220

b.

In this case, the Null hypothesis is fails to reject.

The director concludes that there is insufficient evidence that the new method will operates with a
mean cost less than $220.
Hence, the new method can be implemented.

c.

In this case, the Null hypothesis is rejected.

The director concludes that there is sufficient evidence that the new method will operates with a
mean cost less than $220.
Hence, the manager's proposal can be implemented.

Problem 27
 Duke Energy reported that the cost of electricity for an efficient home in a particular neighborhood
of Cincinnati, Ohio, was $104 per month. A researcher believes that the cost of electricity for a
comparable neighborhood in Chicago, Illinois, is higher. A sam-ple of homes in this Chicago
neighborhood will be taken and the sample mean monthly cost of electricity will be used to test the
following null and alternative hypotheses.
Ho: μ ≤ 104
Ha: μ > 104
a. Assume that the sample data lead to rejection of the null hypothesis. What would be your
conclusion about the cost of electricity in the Chicago neighborhood?
b. What is the Type I error in this situation? What are the consequences of making this error?
c. What is the Type II error in this situation? What are the consequences of making this error?

a.
As Ho is rejected, then we conclude that the mean cost of electricity in Illinois is higher than that of
Cincinnati.

b.
A Type I error is incorrectly rejecting Ho when it is true.
Here, a type 1 error is concluding that the mean cost of electricity in Illinois is higher than that of
Cincinnati, when in fact, it is not.

c.
A Type II error is incorrectly failing to reject Ho when it is false.
A type II error is concluding that the mean cost of electricity in Illinois is not higher than that of
Cincinnati, when in fact, it is.

Problem 28

The label on a 3-quart container of orange juice states that the orange juice contains an average of
1 gram of fat or less. Answer the following questions for a hypothesis test that could be used to test
the claim on the label.
a. Develop the appropriate null and alternative hypotheses.
b. What is the Type I error in this situation? What are the consequences of making this error?
c. What is the Type II error in this situation? What are the consequences of making this error?

a.
A null hypothesis is that orange juice contains no more than 1 gram of fat. An alternative would be
the hypothesis that orange juice contains at least 1 gram of fat.

b.
If do research in which to show that orange juice contains 1 gram of dir or more, then the null
hypothesis can be rejected when it is actually true (the so-called type I error).
This could lead to the alternative hypothesis being correct.

c.
If, in a random way, it has been shown in sample studies that orange juice will contain no more
than one gram of fat, and this result was obtained at random. then you can accept the null
hypothesis when it is actually not true (the so-called type II error).
If an incorrect hypothesis is accepted, the alternative hypothesis will not be considered, that is, the
quality of the experimental results will deteriorate.

Problem 29

Carpetland salespersons average $8,000 per week in sales. Steve Contois, the firm’s vice president,
proposes a compensation plan with new selling incentives. Steve hopes that the results of a trial
selling period will enable him to conclude that the compensa-tion plan increases the average sales
per salesperson.
a. Develop the appropriate null and alternative hypotheses.
b. What is the Type I error in this situation? What are the consequences of making this error?
c. What is the Type II error in this situation? What are the consequences of making this error?
 Carpetland salespersons average $8,000 per week in sales. Steve Contois, the firm’s vice president,
proposes a compensation plan with new selling incentives. Steve hopes that the results of a trial
selling period will enable him to conclude that the compensa-tion plan increases the average sales
per salesperson.
a. Develop the appropriate null and alternative hypotheses.
b. What is the Type I error in this situation? What are the consequences of making this error?
c. What is the Type II error in this situation? What are the consequences of making this error?

a.
Develop the appropriate null and alternative hypotheses.
The appropriate null and alternative hypotheses are,
Ho: μ ≤ 8000
Ha: μ > 8000
Or Ho: μ less than or equal to 8000
Ha: μ greater than 8000

b.
In this situation, a Type I error would occur if it was concluded that the new compensation plan
provides a population mean weekly scales greater than 8000 when in fact it does not.

c.
In this situation, a Type II error would occur if it was concluded that the new compensation plan
provides a population mean weekly scales less than or equal to 8000 when in fact it does not.

Problem 30

Suppose a new production method will be implemented if a hypothesis test supports the
conclusion that the new method reduces the mean operating cost per hour.
a. State the appropriate null and alternative hypotheses if the mean cost for the current production
method is $220 per hour.
b. What is the Type I error in this situation? What are the consequences of making this error?
c. What is the Type II error in this situation? What are the consequences of making this error?

a.
Ho = $220 null hypotheses
H1 < 220 alternative hypotheses

b.

Here, x~ is the sample mean, is the population mean, s is the sample standard deviation, and n is
the sample size.

c.
An error of the second type means that the new system is considered ineffective, although this is
not the case. As a result, the company does not realize profitable modernization without missing
out on benefits.

Problem 31

Which is cheaper: eating out or dining in? The mean cost of a flank steak, broccoli, and rice bought
at the grocery store is $13.04. A sample of 100 neighborhood restaurants showed a mean price of
$12.75 and a standard deviation of $2 for a comparable restaurant meal.
a. Develop appropriate hypotheses for a test to determine whether the sample data support the
conclusion that the mean cost of a restaurant meal is less than fixing a comparable meal at home.
b. Using the sample from the 100 restaurants, what is the p value?
c. At α = 0.05, what is your conclusion?
 The formula for the t-test statistic is,

Here, x~ is the sample mean, μ is the population mean, s is the sample standard deviation, and n is
the sample size.
Decision: Reject Ho if the P-value is less than the significance level of α.
Otherwise do not reject Ho.

a.
The original claim that the mean cost of a restaurant meal is less than fixing a comparable meal at
home can be expressed symbolically as μ < 13.04 . The opposite of the original claim is μ ≥ 13.04. Of
the two symbolic expressions obtained so far, the expression μ < 13.04 does not contain equality
sign, so it becomes alternative hypothesis. The null hypothesis is the assumption that μ ≥ 13.04. So,
the null and alternative hypotheses are,

Explanation:
Based on the known information, the null and alternative hypotheses are,

b.
Let the sample mean be x = 12.75.
Let the hypothesized mean be μ = 13.04 .
Let the sample standard deviation be s = 2 mg.
Le the number of restaurants in a sample be n = 100.
The test statistic value is,

The degrees of freedom is,

df = n - 1
= 100 - 1
= 99
Since, it is a left tailed test, using the excel function formula the corresponding p-value is,

Explanation:
The p-value corresponding to the test statistic 0.0751, which is lies between 0.05 and 0.10.
 c.
Let the level of significance be α = 0.05 .
The test statistic value is t = -1.450 and its p-value is 0.0751. The p-value is greater than the
significance level of 0.05.
Explanation:
Do not reject Ho. There is not sufficient evidence to conclude that the mean cost of a restaurant
meal is less than fixing a comparable meal at home.

Problem 32

A shareholders’ group, in lodging a protest, claimed that the mean tenure for a chief executive
officer (CEO) was at least nine years. A survey of companies reported in the Wall Street Journal
found a sample mean tenure of x~ = 7.27 years for CEOs with a standard deviation of s = 6.38 years.
a. Formulate hypotheses that can be used to challenge the validity of the claim made by the
shareholders’ group.
b. Assume that 85 companies were included in the sample. What is the p value for your hypothesis
test?
c. At α = 0.01, what is your conclusion?
Problem 33

The national mean annual salary for a school administrator is $90,000 a year. A school official took
a sample of 25 school administrators in the state of Ohio to learn about salaries in that state to see
if they differed from the national average.
a. Formulate hypotheses that can be used to determine whether the population mean annual
administrator salary in Ohio differs from the national mean of $90,000.
b. The sample data for 25 Ohio administrators is contained in the file named Administrator. What is
the p value for your hypothesis test in part (a)?
c. At α = 0.05, can your null hypothesis be rejected? What is your conclusion?

77600 101800 77500 84600 94700

76000 78700 75700 87700 69200
Salary data 90700 81300 89400 103400 95400
97200 84200 84300 83800 61500
90700 97600 78700 101300 68800

a.
The national salary of the school administrator is $90000. A sample of 25 school is taken and a test
is performed to check whether the population mean salary is differ from the national annual salary
or not.
The null and alternative hypothesis can be defined as:
Ho : μ = 90000 against H1 : μ ≠ 90000
Here Ho and H1 are the null and alternative hypothesis and μ is the population mean.
Explanation:
The test is performed to check that the population mean salary is differ from the national annual
salary. The null hypothesis indicates that the population mean of the salary is equal to $90000 and
the alternative hypothesis indicates that the population mean of the salary is not equal to $90000.

b.
To obtain the p-value for the test follow the steps in Minitab.
Enter the provided data in a Minitab worksheet.
po = 0.50
n = 121
Enter the variable name in the sample in columns and check the tick box of perform hypothesis test
and specify the hypothesized mean.
p^ = 55/121 = 0.45
In the option menu specify the confidence level as 95% and alternative as not equal to.

The output can be obtained as:

= -0.05/0.0458 = -1.09
The p-value can be obtained from the output obtained from the Minitab output.
Explanation:
The p-value is the probability of the test statistic which gives the area under the normal curve of
the standard normal distribution.
 The output can be obtained as:
= -0.05/0.0458 = -1.09
The p-value can be obtained from the output obtained from the Minitab output.
Explanation:
The p-value is the probability of the test statistic which gives the area under the normal curve of
the standard normal distribution.

c. The null hypothesis will be rejected if the p-value of the test is less than the level of significance.
The p-value for the test is obtained as 0.043 which is less than the level of significance α = 0.05.
So, the null hypothesis is rejected at α = 0.05.
Explanation:
The p-value of the test is less than the level of significance and on the basis of which it can be
conclude that the population mean of the salary is not equal with the national mean salary of the
school administration.

Problem 34

The time married men with children spend on child care averages 6.4 hours per week. You belong
to a professional group on family practices that would like to do its own study to determine if the
time married men in your area spend on child care per week differs from the reported mean of 6.4
hours per week. A sample of 40 married couples will be used with the data collected showing the
hours per week the husband spends on child care. The sample data are contained in the file named
ChildCare.
a. What are the hypotheses if your group would like to determine if the population mean number of
hours married men are spending on child care differs from the mean reported by Time in your
area?
b. What is the sample mean and the p value?
c. Select your own level of significance. What is your conclusion?
10 8.5 8.3 0.4
3.6 10.6 6.6 9.3
5.7 7.9 10.4 9.5
10 7.9 11.8 2.4
8.1 5.4 4.5 7.6
3.7 6.1 6.1 0.4
7.3 8 7.7 6.3
4.7 8.9 8.3 9
7.3 7.3 8 11.9
9 8.7 5.7 9.5

a.
Ho: μ = 6.3
Hα: μ ≠ 6.3
Hence the hypothesis represents Two-Tail.

b.
population mean μ = 6.3
sample mean 'x̄ = 6.6
sample size n = 40.000
std deviation s = 3.1354
std error = 'sx = s/√n = 3.1354 /√40 = 0.4958
t statistic ='(x̄ - μ)/sx = (6.6 - 6.3) /0.496 = 0.6051
p value = 0.5486

c.
Other formula is = T.DIST.2T(0.6051,39)

Problem 35

The Coca-Cola Company reported that the mean per capita annual sales of its bev-erages in the
United States was 423 eight-ounce servings. Suppose you are curious whether the consumption of
Coca-Cola beverages is higher in Atlanta, Georgia, the location of Coca-Cola’s corporate
headquarters. A sample of 36 individuals from the Atlanta area showed a sample mean annual
consumption of 460.4 eight-ounce servings with a standard deviation of s = 101.9 ounces. Using α =
0.05, do the sample results support the conclusion that mean annual consumption of Coca-Cola
beverage products is higher in Atlanta?
 The Coca-Cola Company reported that the mean per capita annual sales of its bev-erages in the
United States was 423 eight-ounce servings. Suppose you are curious whether the consumption of
Coca-Cola beverages is higher in Atlanta, Georgia, the location of Coca-Cola’s corporate
headquarters. A sample of 36 individuals from the Atlanta area showed a sample mean annual
consumption of 460.4 eight-ounce servings with a standard deviation of s = 101.9 ounces. Using α =
0.05, do the sample results support the conclusion that mean annual consumption of Coca-Cola
beverage products is higher in Atlanta?

To test:
Ho: μ = 423 vs. H1: μ > 423
Test statistic:

where, x~ = 460.4, s = 101.9, n = 36, μo = 423

Degrees of freedom = 35
We reject the null hypothesis or Ho if the observed value of t^* > t35 (α), where, α = 0.05
The value of the test statistic : t^*=2.2022
Critical value : t35(α) = 2.030
Now , t^*=2.2022 > 2.030
Hence we reject the null hypothesis or Ho.
Thus we have sufficient evidence to suggest that the mean annual consumption of Coca-Cola
beverage products is higher in Atlanta .

Problem 36

According to the National Automobile Dealers Association, the mean price for used cars is $10,192.
A manager of a Kansas City used car dealership reviewed a sample of 50 recent used car sales at the
dealership in an attempt to determine whether the population mean price for used cars at this
particular dealership differed from the national mean. The prices for the sample of 50 cars are
shown in the file named UsedCars.
a. Formulate the hypotheses that can be used to determine whether a difference exists in the mean
price for used cars at the dealership.
b. What is the p value?
c. At α = 0.05, what is your conclusion?

a.
The null and alternative hypotheses are stated as shown below:
From the given information, the claim that there is evidence that the population mean price for
used cars at this particular dealership differed from the national mean.
Null hypothesis:
Ho: μ = 10,192
Alternative hypothesis:
Ho: μ ≠ 10,192

Explanation:
The claim is to test that there is evidence that the population mean price for used cars at this
particular dealership equal from the national mean. So, need to test there is evidence that the
population mean price for used cars at this particular dealership equal from the national mean.

b.
The P-value is obtained below:
Instructions to build a one sample t test to find the test statistic.
1. In EXCEL, Select Add-Ins > PHStat > One-Sample Tests > t Test for the mean, Sigma unknown.
2. Enter 10,192 under Null hypothesis.
3. Enter 0.05 under Level of significance.
4. In Sample Statistic Options, choose Sample Statistic Known and enter 50 as the Sample size and
9,750 as the Sample mean, and 1,400 as the Sample standard deviation.
5. In Test Options, choose Two (or Upper or Lower) Tail Test.
6. In Output Options, enter a Title and click OK.
Follow the above instructions to get the one sample t test output as shown below:
From Excel-PHStat output, the P-value is 0.0302.
Explanation:
The P-value for this test is obtained by using sample size, sample mean, standard deviation,
population mean and confidence level in Excel-PHStat.
 3. Enter 0.05 under Level of significance.
4. In Sample Statistic Options, choose Sample Statistic Known and enter 50 as the Sample size and
9,750 as the Sample mean, and 1,400 as the Sample standard deviation.
5. In Test Options, choose Two (or Upper or Lower) Tail Test.
6. In Output Options, enter a Title and click OK.
Follow the above instructions to get the one sample t test output as shown below:
From Excel-PHStat output, the P-value is 0.0302.
Explanation:
The P-value for this test is obtained by using sample size, sample mean, standard deviation,
population mean and confidence level in Excel-PHStat.

c.
The conclusion is obtained below:
Conclusion: Use the significance level, α = 0.05
The p-value is less than the level of significance.
That is, p-value (=0.0302) < α (=0.05)
Therefore, by the rejection rule, it cannot be concluded that there is evidence to reject the null
hypothesis (Ho) at α = 0.05.
Explanation:
The conclusion is stated based on the P-value and level of significance using the rejection rule. If
the P-value value is less than or equal to the level of significance, then the null hypothesis is
rejected otherwise not rejected. In this situation the P-value is less than the level of significance so
the null hypothesis is rejected.
Conclusion:
The null hypothesis is Ho: μ = $10,192
The alternative hypothesis is Hα: μ ≠ $10,192

Problem 37

What percentage of the population live in their state of birth? According to the U.S. Census Bureau’s
American Community Survey, the figure ranges from 25% in Nevada to 78.7% in Louisiana. The
average percentage across all states and the District of Columbia is 57.7%. The data in the file
Homestate are consistent with the findings in the American Community Survey. The data are for a
random sample of 120 Arkansas residents and for a random sample of 180 Virginia residents.

a. Formulate hypotheses that can be used to determine whether the percentage of stay-at-home
residents in the two states differs from the overall average of 57.7%.
b. Estimate the proportion of stay-at-home residents in Arkansas. Does this proportion differ
significantly from the mean proportion for all states? Use α = 0.05.
c. Estimate the proportion of stay-at-home residents in Virginia. Does this proportion differ
significantly from the mean proportion for all states? Use α = 0.05.
d. Would you expect the proportion of stay-at-home residents to be higher in Virginia than in
Arkansas? Support your conclusion with the results obtained in parts (b) and (c).

a.
Hypothesises are
Ho : Percentage of stay-at-home residents in the two states is same as the overall average of 57.7%.
p = 0.577
Ha : Percentage of stay-at-home residents in the two states is different from the overall average of
57.7%. p ≠ 0.577

b.
Proportion of stay-at-home residents in Arkansas p = 74/120 = 0.6167
so here standard error of standard proportion seo = sqrt [0.577 * 0.423/120] = 0.0451
so Test statistic Z= (p - po )/ seo = (0.6167 - 0.577)/ 0.0451 = 0.88
p - value = 2 * Pr(Z > 0.88) = 2 * [ 1 - Pr(Z < 0.88)] = 2 * (1 - 0.8106) = 2 * 0.1894 = 0.3788 > 0.05
so we can't reject the null hypothesis and conclude that Percentage of stay-at-home residents in
theArakansas is same as the overall average of 57.7%.

c.
Proportion of stay-at-home residents in Arkansas p = 89/180 = 0.4944
so here standard error of standard proportion se0 = sqrt [0.577 * 0.423/180] = 0.0368
so Test statistic Z= (p - po )/ seo = (0.4944 - 0.577)/ 0.0368 = -2.245
p-value = 2 * Pr(Z < -2.245) = 2 * 0.0124 = 0.0248 < 0.05
so we can reject the null hypothesis and conclude that Percentage of stay-at-home residents in the
Virginia is different as the overall average of 57.7%.
 Proportion of stay-at-home residents in Arkansas p = 89/180 = 0.4944
so here standard error of standard proportion se0 = sqrt [0.577 * 0.423/180] = 0.0368
so Test statistic Z= (p - po )/ seo = (0.4944 - 0.577)/ 0.0368 = -2.245
p-value = 2 * Pr(Z < -2.245) = 2 * 0.0124 = 0.0248 < 0.05
so we can reject the null hypothesis and conclude that Percentage of stay-at-home residents in the
Virginia is different as the overall average of 57.7%.

d.
No, we dont expect that the proportion of stay-at-home residents to be higher in Virginia than in
Arkansas. It is because in part (b) we cant reject the null hypothesis but in part (c) we will be able
to reject the null hypothesis so that we means the stay-at-home residents in Virginia is less than
the stay-at-home residents in arakansa.
NOTE : In excel you can solve this with the help of sorting function. Just select the data and sort it.

Aster sorting, can calculate p - value by function 2 * NORMSINV(Z) put z value in it and get the
result.

Problem 38

Last year, 46% of business owners gave a holiday gift to their employees. A survey of business
owners indicated that 35% plan to provide a holiday gift to their employees. Suppose the survey
results are based on a sample of 60 business owners.
a. How many business owners in the survey plan to provide a holiday gift to their employees?
b. Suppose the business owners in the sample do as they plan. Compute the p value for a
hypothesis test that can be used to determine if the proportion of business owners providing
holiday gifts has decreased from last year.
c. Using a 0.05 level of significance, would you conclude that the proportion of busi-ness owners
providing gifts has decreased? What is the smallest level of signifi-cance for which you could draw
such a conclusion?

Trong bà i là m có p^=45 thì thay bằ ng p^= 35

Problem 39

Ten years ago 53% of American families owned stocks or stock funds. Sample data collected by the
Investment Company Institute indicate that the percentage is now 46%.
a. Develop appropriate hypotheses such that rejection of H0 will support the conclusion that a
smaller proportion of American families own stocks or stock funds this year than 10 years ago.
b. Assume that the Investment Company Institute sampled 300 American families to estimate that
the percent owning stocks or stock funds is 46% this year. What is the p value for your hypothesis
test?
c. At α = 0.01, what is your conclusion?

a.
From the information, observe that the researcher concludes that a smaller proportion of American
families own stocks funds in 2012 than 10 years ago.
Therefore, the Null and Alternative hypothesis is as follows:
Null hypothesis, Ho: p = 0.53
Alternative hypothesis, Hα: p < 0.53
Explanation:
The Null and Alternative hypothesis is, Ho: p = 0.53 vs Hα: p < 0.53
Since the researcher concludes that a smaller proportion of American families own stocks funds in
2012 than 10 years ago.
Use = NORMSDIST (z) to calculate the p-value of the test statistic.

b.
The sample size is 300
The sample proportion is 0.46
The calculation of the test statistic is as follows:

Calculate the p-value.

p-value = P (Z ≤ z) = P (Z ≤ -2.43) = NORMSDIST (-2.43) = 0.0075
Therefore, the p-value is 0.0075
Explanation:
The p-value is 0.0050
This p-value is used to make the appropriate decision about the Null hypothesis.

c.
The level of significance is, α = 0.01
From the p-value and the level of significance, observe that the Null hypothesis is rejected.
Hence, conclude that there is enough evidence to conclude that a smaller proportion of American
families own stock or stock funds in 2012 than 10 years ago.
Explanation:
There is enough evidence to conclude that a smaller proportion of American families own stock or
stock funds in 2012 than 10 years ago.
Here, the p-value is lesser than the level of significance then reject the Null hypothesis.
Conclusion:
The Null and Alternative hypothesis is,
Ho: p= 0.53 vs Hα: p < 0.53
 Hence, conclude that there is enough evidence to conclude that a smaller proportion of American
families own stock or stock funds in 2012 than 10 years ago.
Explanation:
There is enough evidence to conclude that a smaller proportion of American families own stock or
stock funds in 2012 than 10 years ago.
Here, the p-value is lesser than the level of significance then reject the Null hypothesis.
Conclusion:
The Null and Alternative hypothesis is,
Ho: p= 0.53 vs Hα: p < 0.53

Problem 40

According to the University of Nevada Center for Logistics Management, 6% of all merchandise sold
in the United States gets returned. A Houston department store sam-pled 80 items sold in January
and found that 12 of the items were returned.
a. Construct a point estimate of the proportion of items returned for the population of sales
transactions at the Houston store.
b. Construct a 95% confidence interval for the porportion of returns at the Houston store.
c. Is the proportion of returns at the Houston store significantly different from the returns for the
nation as a whole? Provide statistical support for your answer.

Problem 41

Eagle Outfitters is a chain of stores specializing in outdoor apparel and camping gear. It is
considering a promotion that involves mailing discount coupons to all its credit card customers.
This promotion will be considered a success if more than 10% of those receiving the coupons use
them. Before going national with the promotion, coupons were sent to a sample of 100 credit card
customers.
a. Develop hypotheses that can be used to test whether the population proportion of those who will
use the coupons is sufficient to go national.
b. The file named Eagle contains the sample data. Develop a point estimate of the population
proportion.
c. Use α = 0.05 to conduct your hypothesis test. Should Eagle go national with the promotion?

Given that n = 100; x = 13; α = 0.05

a.
From the given information, the promotion will be considered as success if more than 10% of those
receiving the coupons use them.
The null hypothesis is, Ho: p ≤ 0.1
The alternative hypothesis is, Hα: p > 0.1
 From the given information, the promotion will be considered as success if more than 10% of those
receiving the coupons use them.
The null hypothesis is, Ho: p ≤ 0.1
The alternative hypothesis is, Hα: p > 0.1

b.
The sample proportion is the number of successes divided by the sample size:
p̂ ^ = x/n = 13/100 = 0.13

c.
Determine the value of the test-statistic:
z = p̂ ^ - po/sqrt (po (1-po) /n) = 0.13 - 0.10/sqrt (0.10 (1-0.10) /100) ≈ 1.00
The P-value is the probability of obtaining the value of the test statistic, or a value more extreme.
Determine the P-value :
P = P(Z > 1.00) = P(Z < -1.10) = 0.1357
If the P-value is smaller than the significance level α, then reject the null hypothesis:
P > 0.05, Fail to reject null hypothesis
There is sufficient evidence to support the claim that Eagle should go national with the promotion.

Problem 42

One of the reasons health care costs have been rising rapidly in recent years is the increasing cost
of malpractice insurance for physicians. Also, fear of being sued causes doctors to run more
precautionary tests (possibly unnecessary) just to make sure they are not guilty of missing
something. These precautionary tests also add to health care costs. Data in the file named LawSuit
are consistent with findings in a Reader’s Digestarticle and can be used to estimate the proportion
of physicians over the age of 55 who have been sued at least once.
a. Formulate hypotheses that can be used to see if these data can support a finding that more than
half of physicians over the age of 55 have been sued at least once.
b. Use Excel and the file named LawSuit to compute the sample proportion of physi-cians over the
age of 55 who have been sued at least once. What is the p value for your hypothesis test?
c. At α = 0.01, what is your conclusion?

To test the hypothesis is that the proportion of physician over age of 55 who have been sued at
least once is greater than 50% at 2% level of significance.
a.
The null and alternative hypothesis is,
Ho : p = 0.50
Hα : p > 0.50

b.
The sample proportion of physicians over the age of 55 who have been sued at least once is,
p^ = x/n = 88/150 = 0.59
The sample proportion of physicians over the age of 55 who have been sued at least once is 0.59
The z-test statistics is,
By using Excel software, find z-test statistics with the help of following steps:
1, Import the data.
2, Select the MegaStat from Add-Ins option.
3, Select the Proportion vs. Hypothesized Value from Hypothesis Tests.
4, Select data input.
5, Select Confidence level, Test difference and alternative hypothesis.
6, Click OK.
 From the Excel output, the z-test statistics is 2.12.
The p-value for this test is 0.0169

c.
Decision: The conclusion is that the p-value in this context is less than 0.02 which is 0.0169, so the
null hypothesis is rejected at 2% level of significance. There is sufficient evidence to indicate that
the proportion of physician over age of 55 who have been sued at least once is greater than 50%.
The result is statistically significant.

Problem 43

The Port Authority sells a wide variety of cables and adapters for electronic equipment online. Last
year the mean value of orders placed with the Port Authority was $47.28, and management wants
to assess whether the mean value of orders placed to date this year is the same as last year. The
values of a sample of 49,896 orders placed this year are collected and recorded in the file
PortAuthority.
a. Formulate hypotheses that can be used to test whether the mean value of orders placed this year
differs from the mean value of orders placed last year.
b. Use the data in the file PortAuthority to conduct your hypothesis test. What is the p-value for
your hypothesis test? At α = 0.01, what is your conclusion?

Ho: μ = 47.28
Hα: μ ≠ 47.28
α = 0.01

Conclusion: As we reject null so we conclude that the population mean value of orders placed this
year differs from the mean value of orders placed last year.
 Conclusion: As we reject null so we conclude that the population mean value of orders placed this
year differs from the mean value of orders placed last year.

Problem 44

The Port Authority also wants to determine if the gender profile of its customers has changed since
last year, when 59.4% of its orders placed were placed by males. The genders for a sample of
49,896 orders placed this year are collected and recorded in the file PortAuthority.
a. Formulate hypotheses that can be used to test whether the proportion of orders placed by male
customers this year differs from the proportion of orders placed by male customers placed last
year.
b. Use the data in the file PortAuthority to conduct your hypothesis test. What is the pvalue for your
hypothesis test? At α = 0.05, what is your conclusion?

Problem 45

Suppose a sample of 10,001 erroneous Federal income tax returns from last year has been taken
and is provided in the file FedTaxErrors. A positive value indicates the tax-payer underpaid and a
negative value indicates that the taxpayer overpaid.
a. What is the sample mean error made on erroneous Federal income tax returns last year?
b. Using 95% confidence, what is the margin of error?
c. Using the results from parts (a) and (b), develop the 95% confidence interval estimate of the
mean error made on erroneous Federal income tax returns last year.

In federal tax return survey problem given sample size is n = 10001 tax payers
And the standard deviation of errors made on tax return is σ = 12000

a.
Now to find point estimate of federal tax return, use the given data sets and find mean error as
shown in the table:
Sample mean error is:

b.
 To find the margin of error when standard deviation σ is known, the required formula for margin
error is given by:

Since for 95% confidence the critical value is zα/2 = 1.96 (From standard normal table)
Substitute n = 10001, σ = 12000 and zα/2 = 1.96
Into the margin of error formula to get the margin of error as follows:
E = 1.96 x 12000/√10001
E = 1.96 x 119.994
E = 235.188
Therefore the required margin of error is 235.188.

c.
Now to find 95% confidence interval of mean error, the required formula for confidence interval is
given by: x~ ± E... (1)
Substitute x~ = 326.667433 and E = 235.188
Into equation (1) to get the required confidence interval as follows:
326, 667 ± 235.188
(326, 667 – 235.188, 326.667 + 235.188)
(91.479, 561.855)
Interpretation; thus there is 95% confidence that population proportion will between 91.479 and
561.855.

Problem 46

According to the Census Bureau, 2,475,780 people are employed by the federal gov-ernment in the
United States. Suppose that a random sample of 3,500 of these federal employees was selected and
the number of sick hours each of these employees took last year was collected from an electronic
personnel database. The data collected in this survey are provided in the file FedSickHours.

a. What is the sample mean number of sick hours taken by federal employees last year?
b. Using 99% confidence, what is the margin of error?
c. Using the results from parts (a) and (b), develop the 99% confidence interval esti-mate of the
mean number of sick hours taken by federal employees last year.d.If the mean sick hours federal
employees took two years ago was 62.2, what would the confidence interval in part (c) lead you to
conclude about last year?
Problem 47

Internet users were recently asked online to rate their satisfaction with the web browser they use
most frequently. Of 102,519 respondents, 65,120 indicated they were very sat-isfied with the web
browser they use most frequently.
a. What is the sample proportion of Internet users who are very satisfied with the web browser
they use most frequently?
b. Using 95% confidence, what is the margin of error?
c. Using the results from parts (a) and (b), develop the 95% confidence interval esti-mate of the
proportion of Internet users who are very satisfied with the web browser they use most frequently.
Problem 48

ABC News reports that 58% of U.S. drivers admit to speeding. Suppose that a new satellite
technology can instantly measure the speed of any vehicle on a U.S. road and determine whether
the vehicle is speeding, and this satellite technology was used to take a sample of 20,000 vehicles at
6:00 p.m. EST on a recent Tuesday afternoon. Of these 20,000 vehicles, 9,252 were speeding.
a. What is the sample proportion of vehicles on U.S. roads that speed?
b. Using 99% confidence, what is the margin of error?
c. Using the results from parts (a) and (b), develop the 99% confidence interval esti-mate of the
proportion of vehicles on U.S. roads that speed.d.What does the confidence interval in part (c) lead
you to conclude about the ABC News report?

Problem 49

The Federal Government wants to determine if the mean number of business e-mails sent and
received per business day by its employees differs from the mean number of e-mails sent and
received per day by corporate employees, which is 101.5. Suppose the department electronically
collects information on the number of business e-mails sent and received on a randomly selected
business day over the past year from each of 10,163 randomly selected Federal employees. The
results are provided in the file FedEmail. Test the Federal Government’s hypothesis at α = 0.01.
Discuss the practical significance of the results.

Assumed values, standard deviation, σ = 24

sample mean, x = 103
Assumed values, standard deviation, sigma = 24
sample mean, x = 103
Given that, population mean(u) = 101.5
number (n) = 10163
Ho: μ=101.5 alternate, H1: μ!=101.5
level of significance, α = 0.01
from standard normal table, two tailed z α/2 =2.576
since our test is two-tailed reject Ho, if zo < -2.576 or if zo > 2.576
we use test statistic (z) = x-u/(s.d/sqrt(n))
zo = 103-101.5/(24/sqrt(10163)
zo = 6.301
| zo | = 6.301
critical value: the value of |zα| at los 1% is 2.576
we got |zo| =6.301 & | zα | = 2.576
make decision
hence value of | zo | > | z α| and here we reject Ho
p-value : two tailed ( double the one tail ) - hα : ( p != 6.301 ) = 0
hence value of p0.01 > 0, here we reject Ho
Ho: μ=101.5
alternate, H1: μ!=101.5
test statistic: 6.301
critical value: -2.576 , 2.576
decision: reject Ho
 decision: reject Ho
p-value: 0
We have enough evidence to support the claim that the mean number of business e-mails sent and
received per business by its employees differed from the mean number of e-mails sent and
received per day by corporate employees, which is 101.5

Problem 50

CEOs who belong to a popular business-oriented social networking service have an aver-age of 930
connections. Do other members have fewer connections than CEOs? The num-ber of connections
for a random sample of 7,515 members who are not CEOs is provided in the file SocialNetwork.
Using this sample, test the hypothesis that other members have fewer connections than CEOs at α =
0.01. Discuss the practical significance of the results.

Not entire details of 7515 members is visible so I am giving you the formulaes in short for
calculating them.
Here,
Ho: μ = 930
H1: μ < 930
Also the significance level is 0.01, which corresponds to the z score of -2.33
Now, for the given series of values, we can calculate the mean and standard deviation using the
formula:
= AVERAGE ( A1: AN)
=STDEV.S (A1: AN)
Now, calculate the test statistic using formula:
(x̄ - μ) / ( s / √n)
If this value is lesser than -2.33, reject the null else you fail to reject the null.

Problem 51

The American Potato Growers Association (APGA) would like to test the claim that the proportion
of fast-food orders this year that include French fries exceeds the proportion of fast-food orders
that included French fries last year. Suppose that a random sample of 49,581 electronic receipts for
fast-food orders placed this year shows that 31,038 included French fries. Assuming that the
proportion of fast-food orders that included French fries last year is 0.62, use this information to
test APGA’s claim at α = 0.05. Discuss the practical significance of the results.
 Conclusion :
at the α = 0.05 significance level. there is enough evidence to support the claim that French fries
exceeds the proportion of fast food orders that included french fries last year.

Problem 52

According to CNN, 55% of all U.S. smartphone users have used their GPS capability to get
directions. Suppose a major provider of wireless telephone service in Canada wants to know how
GPS usage by its customers compares with U.S. smartphone users. The company collects usage
records for this year for a random sample of 547,192 of its Canadian customers and determines
that 302,050 of these customers have used their telephone’s GPS capability this year. Use this data
to test whether Canadian smartphone users’ GPS usage differs from U.S. smartphone users’ GPS
usage at α = 0.01. Discuss the practical significance of the results.

Problem 53

A well-respected polling agency has conducted a poll for an upcoming Presidential election. The
polling agency has taken measures so that its random sample consists of 50,000 people and is
representative of the voting population. The file Pedro contains survey data for 50,000
respondents in both a pre-election survey and a post-election poll.

a. Based on the data in the “Support Pedro in Pre-Election Poll” column, compute the 99%
confidence interval on the population proportion of voters who support Pedro Ringer in the
upcoming election. If Pedro needs at least 50% of the vote to win in the two-party election, should
he be optimistic about winning the election?
b. Now suppose the election occurs and Pedro wins 55% of the vote. Explain how this result could
occur given the sample information in part (a).
c. In an attempt to explain the election results (Pedro winning 55% of the vote), the polling agency
has followed up with each of the respondents in their pre-election survey. The data in the “Voted
for Pedro?” column corresponds to whether or not the respondent actually voted for Pedro in the
election. Compute the 99% confi-dence interval on the population proportion of voters who voted
for Pedro Ringer. Is this result consistent with the election results?
d. Use a PivotTable to determine the percentage of survey respondents who voted for Pedro that
did not admit to supporting him in a pre-election poll. Use this result to explain the discrepancy
between the pre-election poll and the actual election results. What type of error is occurring here?

a.
1) No, Tom will not be optimistic about winning the election basis of support voted, because 50%
of 30 = 15 and herer total support vote = 12

b.
55% of 30 = 16.5 and tom get 17 which is more than 16.5
Because in pre election poll, 5 voters who did not vote they voted in actual election
 55% of 30 = 16.5 and tom get 17 which is more than 16.5
Because in pre election poll, 5 voters who did not vote they voted in actual election

c.
No, result is not consistent with the election result, because 5 voters changed their vote

d.
Total who support in pre election = 12
total who voted in actual election = 17
so, ((17-12)/30)x100 = 16.66
Therefore,it was a field value miss match error.