Week 4 Midterm.docx

Week 4 Midterm.docx - EC315 Week 4 Midterm PROBLEM 1(Weight...

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EC315 Week 4 Midterm PROBLEM 1 (Weight 40 points). NBC TV news, in a segment on the price of gasoline, reported last evening that the mean price nationwide is $1.50 per gallon for self-serve regular unleaded. A random sample of 35 stations in the Milwaukee, WI, area revealed that the mean price was $1.52 per gallon and that the standard deviation was $0.05 per gallon. At the .05 significance level, can we conclude that the price of gasoline is higher in the Milwaukee area? Calculate the p-value and interpret. Mean price nationwide is $1.50 Random sample of 35 stations Mean price was $1.52 per gallon Standard deviation of $0.05 per gallon Ho: u < 1.5 H1: u > 1.5 Level of significance: a= 0.05 Reject Ho if z > 1.65 t=1.52-1.5/0.05/sqrt(35)=2.366 Reject Ho. The p-value is less than the significance level. P=0.009 The price of gas is higher in the Milwaukee area than the nationwide price. Problem 2 Suppose Babsie generated the following probability distribution: a. Is this probability distribution discrete or continuous? Explain your reasoning.
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