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Unformatted text preview: MGCR 271 Final Exam Solutions Winter 2010 MGCR 271: Business Statistics Final Exam Solutions 29 April 2010, 9:00 AM Examiner: Ramnath Vaidyanathan Assoc Examiner: Morty Yalovsky Student Name McGill ID INSTRUCTIONS 1. Please write your NAME and STUDENT NUMBER on the exam paper. 2. This examination is PRINTED ON BOTH SIDES of the paper. 3. This examination consists of a total of 10 QUESTIONS. 4. This examination consists of a total of 16 pages, including the cover page. 5. SPACE IS PROVIDED on the examination to answer all questions. 6. MARKS alloted to each question appear next to question numbers. 7. This is a CLOSED BOOK examination and counts for 55% of your final grade. 8. TABLES and SELECTED FORMULAE are handed out separately. 9. Your are permitted one double-sided CRIB SHEET printed or hand-written. 10. Show LOGIC since part marks will be given for method and partial results. 11. If you feel that a question is ambiguous, briefly explain your interpretation and state your assumptions. 12. You are permitted TRANSLATION dictionaries ONLY. 13. STANDARD CALCULATOR permitted ONLY. 14. This examination and the tables provided MUST BE RETURNED. 15. GOOD LUCK! 1 MGCR 271 Final Exam Solutions Winter 2010 1. (10 points) Because of uncertainty in real estate markets, many homeowners are considering remodeling and constructing additions rather than selling. The most expensive room in the house to remodel is the kitchen, with an average cost of $23,400. In terms of resale value, is remodeling the kitchen worth the cost? The following cost and resale figures are published in a magazine for 11 cities: S.No City Cost Resale Gain 1 Atlanta 20,427 25,163 4,736 2 Boston 27,255 24,625-2,630 3 Des Moines 22,115 12,600-9,515 4 Kansas City 23,256 24,588 1,332 5 Louisville 21,887 19,267-2,620 6 Portland, OR 24,255 20,150-4,105 7 Raleigh-Durham 19,852 22,500 2,648 8 Reno 23,624 16,667-6,957 9 Ridgewood, NJ 25,885 26,875 990 10 San Fransisco 28,999 35,333 6,334 11 Tulsa 20,836 16,292-4,544 Average 23,490 22,187-1,303 Stdev 2,916 6,207 4,938 (a) (1 point) Clearly state the hypothesis described in the problem using mathematical notation only. H : d 0 (or d = 0) H a : d > (b) (2 points) How would you test the hypothesis stated in (a)? Explain your choice of test. (1 point) Matched Pair t-Test. (1 point) Samples are matched and not independent. (c) (4 points) Compute the values of the standard error and the test statistic. (2 points) se d = s n = 1488 . 86 (2 points) t = d- se d =- . 88 (d) (1 point) Clearly state the distribution of the test statistic obtained in (c). t statistic with df = 10 (e) (2 points) Compute the p-value of the test statistic and state your conclusions (assume = 5%)....
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