This preview shows pages 1–3. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.
View Full Document
Unformatted text preview: 139Spring 2010 FINALName:.............................................NetID ............DO NOT TURN OVER UNTIL TOLD TO DO SONotes:1. Use a calculator where necessary.2. Show your work, place your answers in the spaces provided and make use of the cheat sheet.3. If you want to make any additional assumptions to simplify a problem, please state them clearly.4.Keep verbal answers concise(no more than 4 sentences, and bullet points are &ne).Guide:There are 119 points and you have 150 minutes.Problems 1 and 2 cover material in the &rst part of the course, and problem 2 requires proofs.Background: Problems 1, 3, 4, 5 and 6 are motivated by the economics of the retail gasolineindustry. This industry has undergone a lot of structural change in many states due to the entry oflarge retailers (such as Walmart/Sams Club) and Costco into providing gasoline. In response somestates and governments have enacted laws designed to protect small gasoline retailers.One usefulpiece of terminology : themarkupis the dierence between the retail price paid by consumers andthe wholesale cost of gasoline in a particular market, excluding taxes. For example, if the retail price(excluding taxes) is $2.00 per gallon and the wholesale price is $1.90 per gallon then the markup wouldbe 10 cents. For the purpose of this exam, forget about taxes. Oilmajorsare &rms such as Exxon,BP and Shell.Good Luck and Enjoy the Summer.11. The data contains information on whether a gas station is owned by one of the major oilcompanies (otherwise it is an independent) and whether it o/ers diesel as well as regular gasoline.The following table shows the division of stations in the sample:MajorIndependentDiesel500200No Diesel400350For all of the calculations below, show your working. You can leave your answers as fractions.(a) (2 points) If a station is selected at random from this sample, what is the probability that it isan independent station that o/ers diesel?Solution: the joint probability is200500+400+200+350=429(b) (3 points) If a station is selected at random from this sample, what is the probability that it isowned by a major?Solution:500+400500+400+200+350=1829(c) (2 points) If an independent station is selected at random from this sample, what is the probability that it o/ers diesel?Solution: conditional probability:200200+350=411(d) (6 points) You are also interested in whether stations have convenience stores. Suppose thatin the population (i.e., not just the sample), the probability that a station o/ers diesel is 0.6, theprobability that a station has a convenience store is 0.3 and the probability that a station both o/ersdiesel and has a convenience store is 0.18.Can you conclude that the characteristics of having aconvenience store and o/er diesel areindependent? Clearly state the condition for independence,and explain your working....
View
Full
Document
This note was uploaded on 08/02/2011 for the course ECON 139 taught by Professor Alessandrotarozzi during the Spring '08 term at Duke.
 Spring '08
 ALESSANDROTAROZZI
 Econometrics

Click to edit the document details