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UNIVERSITY OF VICTORIA
August 5, 2011
Economics 246: Statistical Inference
Summer 2011
Assignment #3
Due:
Friday 12
th
of August, 2011, 12 noon. (In the box marked “Econ 246" near
the Economics Department Office.)
Hand in your EViews printout.
Question 1:
(3 marks; 1 each)
State whether each of following statements is true or false, and explain why.
(i)
The probability of the Type I error and the probability of the Type II error always
add to 1.
(ii)
Increasing the value of
α
increases the value of
β
.
(iii)
The smaller the specified value of
is, the larger the rejection region.
Question 2:
(3 Marks; 1 each)
An automobile manufacturer must decide whether the design of its seatbelts in their
newest vehicle is safe. The null hypothesis is
“the design of the seatbelt is safe.”
(i) What is the alternative hypothesis?
(ii) Explain what the Type I and Type II errors are in this situation.
(iii) Which type of error is more serious?
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 Spring '11
 Beryl Li
 Economics, Macroeconomics

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