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Quantitative Methods Exam 2009 S2 Answers

Quantitative Methods Exam 2009 S2 Answers

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Published by Ben Folcarelli
ECON1203 2009 Final Exam Answers to be used in conjunction with Quantitative Methods Exam 2009 S2.
ECON1203 2009 Final Exam Answers to be used in conjunction with Quantitative Methods Exam 2009 S2.

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Published by: Ben Folcarelli on Aug 21, 2012
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Solutions for QMB Semester 2 2009 Final examination
Question 1
 (a)
 
(i) It is a symmetric distribution, therefore it is not skewed at all.[1mark] (ii) From the figure obviously,
n
=12 and
 p
=0.5[1mark] Then E[
 X 
] =
np
= 6 and Var(
 X 
) =
np
(1-
 p
) = 3[0.5 mark for each](iii) Two assumptionsProfitability of projects is independent of each other [0.5 mark] The probability of being profitable is the same for all projects[0.5 mark](b)
 
 X 
: number of crashes per day. Then
 X 
~Poisson(3)(i)
 
0498.0!03)0(
03
e X  P 
(from the CDF table it is P(
 X 
0))[1 mark] (ii)
 
084.0916.01)5(1)5(
 X  P  X  P 
(from the table)[1 mark] (iii)
 
 L
: Revenue Loss, then
 L
=6
 X 
 E[
 L
] = 6E[
 X 
] = 18, Var(
 L
) = 6
2
Var(
 X 
) = 108
STD(
 L
)
10.39[1 mark each](c)
 
(i)
 
ˆ
is more efficient relative to
 
~
means that
 
 
ˆ
has lower variance relative to
 
~
.
 [1 mark](ii) Let
1
and
2
be the random variables denoting the time it takes to complete tasks oneand two. Then
1
~
 N 
(35,36) and
2
~
 N 
(22,9).Let
 X 
be the total time it takes to produce one gadget. Then
 X 
=
1
+
2
is also normal.[0.5 mark]
1
and
2
are independent, therefore
 X 
~
 N 
(35+22,36+9).[0.5 mark]6057(60)()(0.447)0.5(00.447)450.50.17250.6725
 PXPZPZP
   
 
[1 mark] (iii)
n
= 360,
 p
=0.9,
 X 
B
~Binomial(360,0.9)Since n is large, we use normal approximation
 X 
 N
~
 N 
(360×0.9,360×0.9×0.1) or 
 X 
 N
~
 N 
(324,32.4)
 
[0.5 mark]7852.02852.05.0)791.00(5.0 )791.0( 4.323245.319 )5.0320(
    
 Z  P  Z  P  Z  p X  P 
 [0.5 mark]Continuity correction is not very important here since
np
is very large. Give the full 0.5mark if the student realizes this and explains.
 
 
Question 2.
(a)Bookwork. Expect them to say that, provided a r.v.
 X 
has a finite mean
 μ
and variance
σ 
2
then, given a random sample of size
n
, then the sample mean
 X 
is such that
()/(0,1)
nX
 
. Of course, they will not know this limiting argument andcan be expected to answer via the asymptotic result that
2
~(,/)
a
 XNn
 
. A good studentmay comment that the result is exact if sampling from a normal distribution, but then thatit is not the CLT being used. Moreover, any statistic for which an average of independentrandom variables is being used will satisfy the CLT (e.g.
*2121
()
nii
Sn
 
) provided the relevant moments exist.
[2 marks]
(b) Assumption – normally distributed population of expenditures (plus randomsampling).90% CI requires 125.40
1.708*(27.30/5) (using
25
distribution). This is the interval
[116.07 134.73]
.
[3 marks]
(c) If mean expenditure was $116 and inflation is 3% then expenditure in terms of thisyear’s prices is 116.1.03, which is $119.48. Now have a simple hypothesis test to conduct
01
:119.46:119.460.05
 H  H Suppose
   
 Test statistic is
(125.40119.48)/(27.3/5)1.08
.Therefore, at any reasonable significance level,
 H 
0
cannot be rejected (c.v. = 1.708).
[2 marks]
(d) Type I error – reject hypothesis that
 μ
=119.46 
erroneously in favour of 
 H 
1
. Type IIerror, failure to reject
 H 
0
 
in favour of 
 H 
1
when
 H 
1
is, in fact, appropriate.
[1 mark]
(e) Now expect a description of a test of difference between two means. (The students are NOT given the appropriate sample variance so they cannot attempt the computations.)They would again note that last year’s prices must be indexed to the present (or viceversa), so $116 in last year’s dollars would be $119.48 and the same would then need to

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