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Economics 120A Name: ________key_________________July 30, 2003 Student ID#: _________________________

ANSWER to Final Exam:

Econometrics

1.(10 points) The stamping machine on a production line periodically is taken off-line formaintenance. Assume that the amount of time the machine is off-line is uniformlydistributed between 15 and 30 minutes. What is the probability that the machine is off-line for more than 18 minutes? What is the probability that the machine is off-linebetween 21 and 27 minutes?

(Answer)

(a) 18 to 30 minutes represent 80% of the distance between 15 and 30 minutes.(b) The range 21 to 27 is 40% of the distance between 15 and 30 minutes.2. (10 points) The length of time it takes to fill an order at a local sandwich shop isnormally distributed with a mean of 4.1 minutes and a standard deviation of 1.3 minutes.If the sandwich shop employees make $6.00 an hour, what is the mean and standarddeviation for the labor costs per sandwich?

(answer)

E(X) = 4.1 sd(X) = 1.3Labor cost per minute = $0.10Y = 0.10X E(Y) = (0.10)(4.1) = $0.41 sd(Y) = 0.1*sd(X) = 0.13.

2 FINAL EXAM, ECON 120A, SUMMER 2003

3. (15 points) Let the random variable Z follow a standard normal distribution. Calculatethe following probabilities.What is the probability P(Z>0.29)? Note F(0.29)=0.6141.What is the probability P(-0.44<Z<1.2)? Note F(0.44)=0.6700 and Note F(1.2)=0.8849.

(Answer)

(a.) P(Z>0.29) = 1-F(0.29)=1-0.6141=0.3859.(b) P(-0.44<Z<1.2)= F(1.2)-F(-0.44)= F(1.2)-(1-F(0.44))= 0.8849-(1-0.6700)= 0.5549.4. (15 points) Let the random variable Z follow a standard normal distribution.Calculate the following values. Show the calculation procedure.Find the value k, such that P(Z>k) = 0.43. Note F(0.17)=0.57Find the value k, such that P(-0.71<Z<k) = 0.67. Note F(0.71)=0.7611, F(1.33)=0.9089

(Answer)

(a) P(Z>k) =0.43, P(Z

≤

k) =0.57. Since F(0.17)=0.57, so k=0.17(b) P(-0.71<Z<k)=0.67, F(k)-F(-0.71)=0.67, Note that F(0.71)=0.7611.F(-0.71)=1-F(0.71)=0.2389. F(k)=F(-0.71)+0.67=0.9089. Note thatF(1.33)=0.9089. So k=1.33.

3 FINAL EXAM, ECON 120A, SUMMER 2003

5. (10 points) You are in charge of arranging the catering for a company meeting. Yourcompany is responsible for paying for all meals ordered, so you don’t want to order toomany. Suppose that the expected number of people for the meeting is 84, with a standarddeviation of 4 people. What is the fewest number of meals should you order so that theprobability of having more people than meals is 5%? Note that F(1.645)=0.95.

(Answer)

P(X>k) = 0.05, P((X-

µ

)/

σ

>(k-84)/4) =0.05, P(Z>(k-84)/4) = 0.05(k-84)/4 = 1.645 k = 90.58 91 meals6. (15 points) The length of time it takes to fill an order at a local sandwich shop isnormally distributed with a mean of 4.1 minutes and a standard deviation of 1.3 minutes.The manager knows that he can expect complaints if the average time it takes to make asandwich is 4.5 minutes or longer. From a sample of 12 randomly-selected customers,the manager finds that the mean was 4.97. Does the manager have reason to believe thatthe mean time for making a sandwich is actually greater than 4.1? Explain. Note thatF(2.32)=0.9898.

(Answer)

P(

X

>4.97) =

⎟⎟ ⎠ ⎞⎜⎜⎝ ⎛ −>−

123.1
1.497.4

n X p

σ µ

= P(Z>2.32) = 0.0102It is very unlikely that 12 people would have to wait 4.97 minutes or longer. The averagetime to make a sandwich is probably greater than 4.1 minutes.

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