Professor Valerie R. Bencivenga
Economics 329
PRACTICE ASSIGNMENT #8A:
ESTIMATION
1.
An economist wants to estimate the mean number of days lost to absenteeism per year among
professional employees in the financial services industry.
Based on past research, the distribution of
annual days of absenteeism among such employees is approximately normal with standard deviation 5
days.
a.
A random sample of 10 employees yields a sample mean of 6.3 days.
Give the 95% confidence
interval for the population mean.
b.
How many employees should be sampled in order for a 95% confidence interval to have a margin
of error of no more than 0.1 day?
(This means the length of the confidence interval is no more
than 0.2 days.)
2.
A consultant for the World Bank wants to estimate the mean and variance of interest rates charged by
landlords on loans made to their tenant farmers in Bihar, India.
She takes a random sample of 36 loans.
A
normal plot of these data shows it is reasonable to assume an approximately normal distribution for these
interest rates.
The sample mean interest rate is 85 percentage points, and the sample standard deviation
of interest rates is 21 percentage points.
a.
Give the 99% confidence interval for the population mean interest rate.
b.
Give the 99% confidence interval for the population variance of interest rates.
3.
a.
A few years ago, the Austin AmericanStatesman reported the results of a survey of costs of
banking.
One question concerned annual fees paid to maintain a checking account.
In a random
sample of 34 banks surveyed in Texas, average fees were $197.70.
Assume that fees are
approximately normally distributed.
Let’s suppose that the sample standard deviation of fees was
$60.
Give the 95% confidence interval for the population mean level of fees.
b.
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 Spring '12
 BENCIVENGA
 Economics, Normal Distribution, Standard Deviation, Interest Rates, Tmax

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