Economics 203 Midterm 1 Solutions — Fall 2009 — Form A
1. C. A bellshaped distribution with extremely high values added in to the right end of the
distribution skews positively. The mean is more affected by extreme values than the median
and so the median has to be less than the mean.
2. E. The steps in the hypothesis testing process involve setting the hypotheses and then sig
nificance level. You would then gather data, calculate a point estimate, then test statistic,
and finally make a conclusion to your hypothesis by comparing the test statistic to the
appropriate critical value based on the significance level and hypothesis.
3. C. These are dependent samples as the time is recorded for exactly the same puzzle between
Joe and Josh. This reduces the noise that would be introduced into the analysis if random
puzzles were given to Joe and another set of random puzzles were given to Josh.
4. D. This is a difference in proportions set up since you either own a car or not. The statement
about more likely than the other says that the hypothesized mean difference is equal to zero.
5. C. This is a
χ
2
for single population variance since you have a population standard deviation
you are interested in exploring with a sample.
6. E. Inference uses a sample to give us information about statistical population characteristics.
7. E. All of the statements (A)(D) are not true. The test statistic needs to be more extreme
than the critical value. If we do not reject or reject, we may be right or wrong. And
α
is
the a priori probability that we will reject the null hypothesis when the null hypothesis is
actually true.
8. A. This is a difference in proportions question. The relevant point estimate is 80/120  64/96
= 0. Thus the test statistic would equal zero. This is a one tailed test which goes to the left
end of the z distribution. Since the z distribution is symmetric, a test statistic of 0 with a
onetailed test would result in a pvalue equal to 0.5.
9. A. The empirical rule tells us that within 2 standard deviations, we expect to see 95% of the
data. This implies that 5% will be outside of 2 standard deviations from the mean. Now
the empirical rule further tells us that the distribution is symmetric so we assume 2.5% is
in each tail. Thus there are 2 standard deviations between 65 and 95 and we want the area
beyond 95 days, this corresponds to 2.5% then.
This preview has intentionally blurred sections. Sign up to view the full version.
View Full Document
This is the end of the preview.
Sign up
to
access the rest of the document.
 Spring '10
 Petry
 Economics, Standard Deviation, Variance

Click to edit the document details