STAT 2300 Business Statistics/Summer 2009, Section 002

Exam 2 (KEY) July 20, 2009

Name:
USU A#:
Score: /225
Directions: This exam consists of six (6) questions, assessing material learned within Modules 7.1
through 8.8 of the course textbook. The point total for each question is given within parentheses.
You have two (2) hours to complete the exam. To receive full credit, show your work. Clearly
indicate your nal answer.
List of Formulas
Condence Intervals Test Statistics Rejection Point Rules
_
_
x z
/2

n
_
_
z =
x
0
/

n
z < z

, z > z

, |z| > z
/2
_
_
x t
/2
s

n
_
_
t =
x
0
s/

n
t < t

, t > t

, |t| > t
/2
_
_
p z
/2

p(1 p)
n
_
_
z =
p p
0

p
0
(1 p
0
)
n
z < z

, z > z

, |z| > z
/2
_
_
(n 1)s
2

2
/2
,
(n 1)s
2

2
(1/2)
_
_

2
=
(n 1)s
2

2
0

2
<
2
(1)
,
2
>
2

,
2
>
2
/2
or
2
<
2
(1/2)
n =
_
_
(z

+ z

)
|
0

a
|
_
_
2
, z

=
_
z

, if H
a
is one-sided
z
/2
, if H
a
is two-sided.
1
1. (20) (a) A test of hypotheses, pertaining to the location of the mean () for a quantitative trait, is
conducted. The alternative hypothesis for the test is H
a
: <
0
, where
0
is some real
number. Suppose we determine the test statistic value to be z = 1.65. At the 0.05 level of
signicance, do we reject the null hypothesis? Briey explain your answer.
Solution: We fail to reject H
0
. The rejection point rule says to reject H
0
if and only if
z < z

= z
0.05
= 1.645. Since z = 1.65 > 1.645, we fail to reject H
0
.
The p-value of the test is
p-value = P(z 1.65) = 0.9505.
Since the p-value is greater than the signicance level, = 0.05, we fail to reject H
0
.
Fill in the blank for parts (b) to (d) (2pts each). For each, assume the respective probability
is calculated under the assumption that the null hypothesis is true.
(b) Type I Error, is the probability of rejecting the null hypothesis, when in fact this hypoth-
esis is true.
(c) Power, 1 is the probability of rejecting the null hypothesis, when in fact this hypothesis
is false.
(d) Type II Error, is the probability of failing to reject the null hypothesis, when in fact this
hypothesis is false.
For parts (e) to (h), circle T for true, or F for false (2pts each).
(e) T F The larger the p-value, the more we doubt the null hypothesis.
(f) T F Alpha () is the probability that the test statistic would assume a value as or more
extreme than the observed value of the test.
(g) T F If a null hypothesis is rejected at a signicance level of 0.05, it will always be rejected
at a signicance level of 0.01.
(h) T F When the null hypothesis is true, there is no possibility of making a Type I error.
2
2. (50) A company manufactures rope whose breaking strengths have a mean of 300 pounds (lb) and a
standard deviation of 24 lb. It is believed that by a newly developed process the mean breaking
strength can be increased.
(a) Setup the appropriate hypotheses to test this claim.
Solution: Let be the true mean breaking strength for the new ropes. We test
H
0
: 300 lb
H
a
: > 300 lb.
(b) If the true mean breaking strength for the new ropes is 7.05 pounds greater than the mean
breaking strength for the existing ropes, we want our test (the setup of which you derived in
part (a) above) to have 90% power to detect this dierence. What sample size (n) is needed?
ASSUME: a signicance level of 0.05; and that the population standard deviation for the
new rope manufacturing process equals that of the existing rope manufacturing process.
Solution: Let
0
denote the mean breaking strength for the existing ropes. Further, let

a
denote the mean breaking strength for the new ropes. The mean breaking strength for
the new ropes (
a
) is 7.05 pounds greater than the mean breaking strength for the existing
ropes (
0
), precisely when
a

0
= 7.05 lb. For 90% power, we assume 10% Type II
Error, for which it is z
=0.10
= 1.28. Our signicance level is = 0.05 for a one-sided test
of signicance, for which we have z

= z
=0.05
= 1.645. We are told to assume the standard
deviation for the new rope manufacturing process equals that of the existing process, so that
= 24 lb. Thus,
n =
_
_
(z

+ z

)
|
0

a
|
_
_
2
=
_
_
(1.645 + 1.28)(24)
7.05
_
_
2
= 99.15.
Therefore, we require a sample size of n = 100 ropes.
3
(c) We draw a random sample of size n from the new rope manufacturing process, where n
equals the value you calculated in part (b) above. Suppose we nd the mean breaking
strength for the sample to be 305 lb. Using the results from this random sample, test your
hypotheses (derived in part (a)) at the 0.05 level of signicance. Again, assume the popula-
tion standard deviation for the new rope manufacturing process equals that of the existing
rope manufacturing process. What do you conclude?
Solution: Since n 30, we get a Central Limit Theorem result. Our test statistic is thus
given by
z =
x
0
/

n
=
305 300
24/

100
=
5
2.4
= 2.083.
By part (b) above, we found z
0.05
= 1.645. Using the rejection point rule, we reject H
0
if
and only if z > z
0.05
. Since
z = 2.083 > z
0.05
= 1.645,
we reject H
0
. The p-value of the test is
p-value = P(z 2.083) = 0.0189.
These data (the sample of 100 ropes) indicate the true underlying mean breaking strength
of ropes under the new manufacturing process, statistically signicantly exceeds the value
of 300 lb, the mean under the existing manufacturing process (p-value = 0.02).
4
3. (30) Body mass index is calculated by dividing a persons weight by the square of his/her height; it
is a measure of the extent to which the individual is overweight. For the population of middle-
aged men who later develop diabetes mellitus, the distribution of baseline body mass indices is
approximately normal with an unknown mean and unknown standard deviation . A sample of
45 men selected from this group has mean x = 25.0 kg/m
2
and standard deviation s = 2.7 kg/m
2
.
(a) Construct a 95% condence interval for .
Solution: First, we are told the distribution of BMI is approximately normal, so that we can
base our inference for on normal theory. Since is unknown, we have to base inference for
on the t distributions. For 95% condence, we have 1 = 0.95, for which /2 = 0.025. For
n = 45, the corresponding degrees of freedom for our t distribution lookup is df = n1 = 44.
From Table 1.2, we nd, t
0.025
= 2.0154. Thus, a 95% condence interval for is
_
x t
/2
s

n
_
=
_
25.0 (2.0154)
2.7

45
_
= [24.19 kg/m
2
, 25.81 kg/m
2
].
Based on these data, we are 95% condent the true underlying mean BMI for middle-aged
men who later develop diabetes mellitus, lies between 24.2 kg/m
2
and 25.8 kg/m
2
.
(b) At the 0.05 level of signicance, test the null hypothesis that the mean baseline body mass
index for the population of middle-aged men who later develop diabetes mellitus is equal to
24.0 kg/m
2
. What do you conclude?
Solution: We are asked to test the null hypothesis, H
0
: = 24.0 kg/m
2
. Thus, we test the
hypotheses
H
0
: = 24.0 kg/m
2
H
a
: = 24.0 kg/m
2
.
Since: (1) we are testing a two-sided alternative hypothesis at the = 0.05 level of signif-
icance; and (2) the corresponding 95% condence interval for does not contain the null
value, = 24.0 kg/m
2
, we reject H
0
.
These data indicate, the true underlying mean BMI for middle-aged men who later develop
diabetes mellitus, statistically signicantly diers from the value 24.0 kg/m
2
(p-value < 0.05).
5
4. (50) The manufacturer of the ColorSmart-5000 television set claims 95 percent of its sets last at least
ve years without needing a single repair. In order to test this claim, a consumer group randomly
selects 400 consumers who have owned a ColorSmart-5000 television set for ve years. Of these
400 consumers, 316 say their television sets did not need a repair.
(a) Find a 99% condence interval for p, the proportion of all ColorSmart-5000 television sets
that have lasted at least ve years without needing a single repair.
Solution: First, note that
p =
# televisions within the sample lasting at least 5 years
Sample size
= 316/400 = 0.79.
Next, we nd
min{n p, n(1 p)} = min{316, 84} = 84 > 5,
so that the normal approximation to the sampling distribution for p should be valid. Using
Table A.3, we nd z
0.005
= 2.576, for which a 99% condence interval for p is
_
p z
0.005
_
p(1 p)
n
_
=
_
0.79 (2.576)
_
(0.79)(0.21)
400
_
= [0.79 0.05246]
= [0.7375, 0.8425] .
Based on these data, we are 99% condent the true underlying proportion of Colorsmart-5000
television sets lasting at least ve years, lies between 73.7% and 84.3%.
(b) At the 0.05 level of signicance, test the null hypothesis, H
0
: p 0.95, the claim of the
manufacturer. What do you conclude? Be sure to setup your hypotheses.
Solution: We test the hypotheses
H
0
: p 0.95
H
a
: p < 0.95.
Here, we nd
min{np
0
, n(1 p
0
)} = min{400(0.95), 400(0.05)} = min{380, 20} = 20 > 5,
so that, under H
0
, the sampling distribution of p is approximately normal with mean,

p
= p
0
= 0.95 and standard deviation,
p
, given by

p
=
_
p
0
(1 p
0
)
n
=
_
0.95(0.05)
400
= 0.01089725.
6
The test statistic for our test is
z =
p p
0
_
p
0
(1p
0
)
n
=
0.79 0.95
_
(0.95)(0.05)
400
= 14.68261.
Using the rejection point rule, we reject H
0
whenever z < z

. It is,
14.68261 = z < 1.645 = z
0.05
,
so that we reject H
0
. These data indicate, the true underlying proportion of television sets
lasting at least 5 years without requiring repair, is statistically signicantly less than the
claimed value of the manufacturer, 95% (p-value < 0.001).
Exact P-Value Calculation: Within the sample of size 400 television, let x represent the
number of televisions which do not require a single repair over the initial ve year ownership
period. Then, x Bin(400, p). For the sample obtained and the alternative stated, the
p-value is
p-value = P(reject H
0
|H
0
is true)
= P(x 316|p = 0.95)
. .
observed or more extreme in the direction of the alternative hypothesis
=
316

x=0
_
400
x
_
(0.95)
x
(1 0.95)
400x
= 5.51 10
29
.
7
5. (25) Consider a normally distributed population with unknown mean and standard deviation . We
wish to test the hypotheses
H
0
: = 0.5 mm
H
a
: = 0.5 mm.
A random sample of size two is drawn from this population, resulting in a mean of 0.7 mm and
standard deviation of 0.1285 mm. Test these hypotheses at the 0.05 level of signicance. What
do you conclude?
Solution: We are given the set of hypotheses, and we test these hypotheses at the = 0.05 level
of signicance. Since the standard deviation is unknown, we base our inference for on the t
distributions. We have
t =
x
0
s/

n
=
0.7 0.5
0.1285/

2
= 2.201.
Since the sample size is n = 2, we compare the test statistic value to the t distribution with
n1 = 1 degrees of freedom. From Table 1.2, we nd t
0.025
= 12.7062. We reject H
0
if and only
if |t| > t
/2
. It is,
2.201 = |2.201| = |t| < t
0.025
= 12.7062,
so that we fail to reject H
0
. These data indicate, the true underlying mean for this population
(), is not statistically signicantly dierent from the value 0.5 mm (p-value=0.27).
8
6. (50) Consider a normally distributed population with unknown mean and standard deviation . A
random sample of ten measurements from this population yields a mean of 438cm and standard
deviation of 2cm. Using the data collected from this random sample:
(a) Construct a 95% condence interval for
2
.
Solution: From Table 1.3 provided, for df = n 1 = 9, we nd

2
0.025
= 19.02277

2
0.975
= 2.700389.
Therefore, a 95% condence interval for
2
is
_
_
(n 1)s
2

2
/2
,
(n 1)s
2

2
(1/2)
_
_
=
_
_
(10 1)(2)
2
19.02277
,
(10 1)(2)
2
2.700389
_
_
= [1.892cm
2
, 13.331cm
2
]
Based on these data, we are 95% condent that the true underlying population variance
(
2
), lies between 1.89cm
2
and 13.33cm
2
.
(b) At the 0.05 level of signicance, setup the appropriate set of hypotheses and test the null
hypothesis, H
0
:
2
= 3cm
2
, against the two-sided alternative hypothesis. What do you
conclude?
Solution: At the = 0.05 level of signicance, we test the hypotheses
H
0
:
2
= 3cm
2
H
a
:
2
= 3cm
2
.
Since the 95% condence interval contains the null value (
2
0
= 3cm
2
), we fail to reject the
null hypothesis at the 0.05 level of signicance. These data indicate, the true underlying
variance for this population (
2
), is not statistically signicantly dierent from the value of
3cm
2
(p-value=0.43).
9
STAT 2300 - SUMMER 2009 -- EXAM 2 7/20/2009 1
PROBLEM 2 -- SOLUTION (b) 15:16 Wednesday, July 15, 2009
The POWER Procedure
One-sample t Test for Mean
STAT 2300 - SUMMER 2009 -- EXAM 2 7/20/2009 1
PROBLEM 2 -- SOLUTION (b) 15:16 Wednesday, July 15, 2009
The POWER Procedure
One-sample t Test for Mean
Fixed Scenario Elements
Distribution Normal
Method Exact
Number of Sides U
Null Mean 300
Alpha 0.05
Mean 307.05
Standard Deviation 24
Nominal Power 0.9
Computed N
Total
Actual
Power
N
Total
0.901 101
STAT 2300 - SUMMER 2009 -- EXAM 2 7/20/2009 2
PROBLEM 2 -- SOLUTION (c) 15:16 Wednesday, July 15, 2009
The TTEST Procedure
STAT 2300 - SUMMER 2009 -- EXAM 2 7/20/2009 2
PROBLEM 2 -- SOLUTION (c) 15:16 Wednesday, July 15, 2009
The TTEST Procedure
Statistics
Variable N
Lower CL
Mean Mean
Upper CL
Mean
Lower CL
Std Dev Std Dev
Upper CL
Std Dev Std Err Minimum Maximum
BREAK_STR 100 300.24 305 309.76 . 24 . 2.4 . .
T-Tests
Variable DF t Value Pr > |t|
BREAK_STR 99 2.08 0.0398
STAT 2300 - SUMMER 2009 -- EXAM 2 7/20/2009 3
PROBLEM 3 -- SOLUTION 15:16 Wednesday, July 15, 2009
The TTEST Procedure
STAT 2300 - SUMMER 2009 -- EXAM 2 7/20/2009 3
PROBLEM 3 -- SOLUTION 15:16 Wednesday, July 15, 2009
The TTEST Procedure
Statistics
Variable N
Lower CL
Mean Mean
Upper CL
Mean
Lower CL
Std Dev Std Dev
Upper CL
Std Dev Std Err Minimum Maximum
BMI 45 24.189 25 25.811 . 2.7 . 0.4025 . .
T-Tests
Variable DF t Value Pr > |t|
BMI 44 2.48 0.0168
STAT 2300 - SUMMER 2009 -- EXAM 2 7/20/2009 4
PROBLEM 4 -- SOLUTION 15:16 Wednesday, July 15, 2009
The FREQ Procedure
STAT 2300 - SUMMER 2009 -- EXAM 2 7/20/2009 4
PROBLEM 4 -- SOLUTION 15:16 Wednesday, July 15, 2009
The FREQ Procedure
SUCCESS Frequency Percent
Cumulative
Frequency
Cumulative
Percent
1 316 79.00 316 79.00
0 84 21.00 400 100.00
Binomial Proportion for
SUCCESS = 1
Proportion (P) 0.7900
ASE 0.0204
99% Lower Conf Limit 0.7375
99% Upper Conf Limit 0.8425
Exact Conf Limits
99% Lower Conf Limit 0.7330
99% Upper Conf Limit 0.8400
Test of H0: Proportion = 0.95
ASE under H0 0.0109
Z -14.6826
One-sided Pr < Z <.0001
Two-sided Pr > |Z| <.0001
Exact Test
One-sided Pr <= P 5.511E-29
Two-sided = 2 * One-sided 1.102E-28
Sample Size = 400
STAT 2300 - SUMMER 2009 -- EXAM 2 7/20/2009 5
PROBLEM 5 -- SOLUTION 15:16 Wednesday, July 15, 2009
The TTEST Procedure
STAT 2300 - SUMMER 2009 -- EXAM 2 7/20/2009 5
PROBLEM 5 -- SOLUTION 15:16 Wednesday, July 15, 2009
The TTEST Procedure
Statistics
Variable N
Lower CL
Mean Mean
Upper CL
Mean
Lower CL
Std Dev Std Dev
Upper CL
Std Dev Std Err Minimum Maximum
RESPONSE 2 -0.455 0.7 1.8545 . 0.1285 . 0.0909 . .
T-Tests
Variable DF t Value Pr > |t|
RESPONSE 1 2.20 0.2715