Question 1

a) Assuming that the population is normally distributed, construct a 95% confidence

interval for the population mean for each of the samples below. Explain why these
two samples produce different confidence intervals even though they have the
same mean and range.

Sample A Sample B

1 1

4 2

4 3

4 4

5 5

5 6

5 7

8 8

a) Construct a 95% confidence interval for the population mean for sample A.

x̅ = ( Σ xi ) / n sample mean = x̅ = 4.5

∑( x i−x ˉ )2
s= √ n−1
Sample standard deviation= s= 1.802

C.I (Sample A) = x̅ - t α/2 . s/√ n <µ< x̅ + t α/2 . s/√ n

C.I (Sample A) = 4.5-1.5067 <µ< 4.5+1.5067

C.I (Sample A) = 2.993 <µ< 6.0067

b) Construct a 95% confidence interval for the population mean for sample B.

x̅ = ( Σ xi ) / n sample mean = x̅ = 4.5

∑( x i−x ˉ )2
s= √ n−1
Sample standard deviation= s= 2.2912

C.I (Sample B) = x̅ - t α/2 . s/√ n <µ< x̅ + t α/2 . s/√ n

C.I (Sample B) = 4.5-1.9158 <µ< 4.5+1.9158

C.I (Sample B) = 2.584 <µ< 6.4158

c) Explain why these two samples produce different confidence intervals even though they
have the same mean and range.

Ans: The samples produce different confidence intervals because their standard deviations

are different.
 Question 2

The accompanying table contains data on the weight, in grams, of a sample of 50 tea bags
produced during an eight-hour shift.

5.64 5.32 5.56 5.61 5.47 5.32 5.77 5.48 5.61 5.64

5.43 5.54 5.38 5.57 5.41 5.69 5.55 5.32 5.46 5.49

5.43 5.46 5.53 5.47 5.46 5.29 5.43 5.49 5.44 5.56

5.38 5.53 5.55 5.44 5.61 5.48 5.57 5.52 5.26 5.66

5.51 5.41 5.56 5.53 5.51 5.57 5.57 5.57 5.56 5.36

Is there evidence that the mean amount of tea per bag is different from 5.5 grams?
(Use = 0.05).
It is a two-tailed test where, n = 50, x̅ = 5.4994 s = 0.1061

σ is unknown, so use t statistic. tn-1 = 50-1 = 49

i) Formation of Hypothesis:

H0 : µ = 5.5

H1 : µ ≠ 5.5

ii) Level of significance: α = 0.05, α/2 = 0.025,

iii) Critical Region: t49, 0.025 = ± 2.021 |t| > t n-1,α/2

iv) Test Statistics:

x́−0
t= s /√ n = (5.4994-5.5)/(0.1061/√ 50)= -0.0398
v) Decision : since |t| > tn-1 α/2 -0.398 ≯ 2.021 therefore H0 is not rejected.

vi) Conclusion: There is not enough evidence to reject H0 or to conclude that the mean amount of tea
bag is different from 5.5 grams.
Question 3

A certain consumer research firm analyzed the 6% of adults from a particular region that are
either "Superbanked" or "Unbanked." Superbanked consumers are defined as adults who live
in a household that has multiple asset accounts at financial institutions, as well as some
additional investments; Unbanked consumers are adults who live in a household that does not
use a bank or credit union. By finding the 3% of adults that are Superbanked, the firm
identifies financially savvy consumers who might be open to diversifying their financial
portfolios; by identifying the Unbanked, the firm provides insight into the ultimate
prospective client for banks and financial institutions. As part of its analysis, the firm
reported that 88% of Superbanked consumers from the region use credit cards in the past
three months as compared to 21% of Unbanked consumers. Suppose that these results were
based on 1 comma 200 Superbanked consumers and 700 Unbanked consumers.

a) At the 0.05 level of significance, is there evidence of a significant difference between

the Superbanked and the Unbanked with respect to the proportion that use credit cards?

i)Formation of Hypothesis:
H0:p1−p2= 0
H1:p1−p2≠ 0
OR
H0:p1= p2
H1:p1≠ p2
ii) Level of significance:
α=005 α/2= 0.025 1-0.025 =0.9750 in Z table
Value = 1.96

iii) Critical Region: If |Zstat| > Z α/2

iv) Test Statistics:

( p 1− p 2 )−( π 1−π 2)
Zstat = p 1 ( 1− p 1 ) p 2 ( 1−p 2 )
√ n1
+¿
n2
¿

( 0.88−0.21 )−(0)
Zstat = 0.88 ( 1−0.88 ) 0.21 ( 1−0.21 )
√ 1200
+¿
700
¿

Zstat = 18.98
v) Decision : since |Zstat| > Z α/2 18.98> 1.96 therefore reject H0.

vi) Conclusion: There is evidence of a difference in the proportion of Superbanked and

Unbanked with respect to the proportion that use credit cards.

b) Construct and interpret a 95% confidence interval estimate for the difference between the
Superbanked and the Unbanked with respect to the proportion that use credit cards.
Interpret your answer.

p 1 ( 1− p 1 ) p 2 ( 1− p 2 )
( p 1− p 2 ) ± z
√ n1
+¿
n2
¿

0.88 ( 1−0.88 ) 0.21 ( 1−0.21 )

= (0.88-0.21) ± 1.96
√ 1200
+¿
700
¿

= 0.67± 0.0353

C.I = 0.6347 ≤ π 1−π 2 ≤ 0.7053

we are 95% confident that the difference between the Superbanked and the Unbanked with
respect to the proportion that use credit cards is between 0.6347 and 0.7053.