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MidTerm_EC315[1]

# MidTerm_EC315[1] - EC/315 Midterm Examination Name...

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EC/315 Midterm Examination Name Directions: This test is open-book and open notes and covers the content from weeks 1 through week 4 of EC/315. The test will be typed and submitted in the Dropbox marked Midterm Exam. The midterm is due the last day of Week 4. 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. Hypotheses: H 0 : ≤ 1.5 HA: > 1.5 Significance Level: α = 0.05, as per the question. Test Statistic: Since the sample size is greater than 30, we can use the z test z = ( - µ) / (σ/√n) z = (1.52 - 1.5 ) / (0.05/√35) z = 0.02 / (0.05/5.9161) z = 2.3664 Decision Rule: Using Excel, one-tailed p = 0.009 Reject H 0 -- the mean price of gasoline is greater than \$1.50. P value = 2(0.5000 – 0.4911) = 2(0.0089) = 0.0178 Decision Summary: Since p < alpha 0.05, there is sufficient evidence to reject the null hypothesis. The mean price is higher in Milwaukee. The probability of drawing a sample of 35 when the mean is ≥ \$1.52, from a population with a mean of \$1.50 is 0.0178. This is far below the 0.05 level of significance. We reject the null hypothesis and conclude that the price of gas is higher in the Milwaukee area. PROBLEM 2: (Weight 20 points) .

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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
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MidTerm_EC315[1] - EC/315 Midterm Examination Name...

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