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Midterm Exam (EC315)

# Midterm Exam (EC315) - Week 4 Midterm Exam EC 315...

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Week 4- Midterm Exam EC 315 Quantitative Research Methods 1 PROBLEM 1 (Weight 20 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 per gallon Random Sample of 35 stations Mean price was \$1.52 per gallon Standard Deviation of \$0.05 per gallon At the .05 significance level; can we conclude that the price of gasoline is higher in the Milwaukee area? Five-Step Procedures for testing a Hypothesis: 1. State null and alternate hypotheses Ho: µ ≤ 2.52 H 1 : µ ≥ 2.52 2. Select a level of significance At the 0.05 significance level: α = 0.05 Null Hypothesis Accepts Ho Rejects Ho Ho is True Correct Decision Type I Error Ho is False Type II Error Correct Decision Comment [C1]: Very good answers were prepared Nice efforts in the midterm exam 190/200

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Week 4- Midterm Exam EC 315 Quantitative Research Methods 2 3. Identify the test statistic Standard Deviation is known, σ = 0.05 Testing a mean, σ known z = X - µ / σ/ √n = 2.52 2.50 / 0.05/√35 = 0.02/(0.05/5.92) = 0.02/ 0.0084 z = 2.80 4. Formulate a decision rule ~ a statement of the conditions under which the null hypothesis is rejected and conditions under which it is not rejected ~ μ = 2.52 X = 250 0.05 significance level z = 2.80 Ho : µ ≤ 2.52 H 1 : µ ≥ 2.52 Right-tailed test: the area of rejection is to the right of 1.65 and the sampling distribution of the test statistic “z” is normally distributed. 5. Takes a sample, arrive at decision a. Do not reject Ho b. Reject Ho and accept H 1 “p - value” is greater than the significance level; Ho is not rejected We can conclude that the price of gasoline is higher in the Milwaukee area than in the nationwide price.
Week 4- Midterm Exam EC 315 Quantitative Research Methods 3 PROBLEM 2: (Weight 20 points) Suppose Babsie generated the following probability distribution: X p(x) 5 .25 7 .30 10 .25 12 .05 15 .15 a. Is this probability distribution discrete or continuous? Explain your reasoning.

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Midterm Exam (EC315) - Week 4 Midterm Exam EC 315...

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