Midterm 1 Practice Problems  Econometrics 120A
1. The Big Mac Index is annually compiled by “The Economist” to compare exchange rates across
diﬀerent countries. The following is a sample of such list, containing the price of a Big Mac in US
Dollars for a number of diﬀerent countries.
Country
Price in US$
Indonesia
2.05
Norway
7.90
Iceland
6.00
Malaysia
1.70
Latvia
3.50
(a) What is the average price in dollars of a Big Mac?
(b) What is the median price in dollars of a Big Mac?
(c) Is your answer to (b) the 50
th
percentile of the sample? Is there a number that is the 50
th
percentile of this sample?
(d) The current US$Euro exchange rate is 0.75 (that is 1 Dollar buys you 0.75 Euros). What is
the average price of a Big Mac in Euros?
(e) The standard deviation of the price of a Big Mac in US$ is 2.66. What is the variance of the
price of a Big Mac in Euros?
2. Suppose the number of miles per gallon that you can get on a Toyota Prius is normally distributed
with mean 45 and standard deviation 5.
(a) What is the probability that you get less than 35 miles on a gallon of gas?
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 Spring '10
 M.Abajian
 Econometrics, Normal Distribution, Standard Deviation, Big Mac

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