ECN 3221

STATISTICAL ECONOMICS

SESSION 2020/21 (GROUP 1)

TUTORIAL 2

ANSWER SHEET

PREPARED BY:

HAVINASH RAO A/L KRISHNAN

(202759)

PREPARED TO:

DR. NUR SYAZWANI MAZLAN MR. KHAIR

Statistical Economics

Tutorial 2

Interval Estimation

1) A simple random sample of 60 items resulted in a sample mean of 80. The population
standard deviation is 𝜎 =15.
a. Compute the 95% confidence interval for the population mean.
b. Assuming that the same sample mean was obtained from a sample of 120 items. Provide a
95% confidence interval for the population mean.
c. What is the effect of a larger sample size on the interval estimate?
2) Sinostyle magazine reported that the mean annual household income of its readers is
RM119,155. Assume this estimate of the mean annual household income is based on a
sample of 80 households, and based on past studies, the population standard deviation is
known to be 𝜎 =RM30,000.
a. Develop a 90% confidence interval estimate of the population mean.
b. Develop a 95% confidence interval estimate of the population mean.
c. Develop a 99% confidence interval estimate of the population mean.
d. Discuss what happens to the width of the confidence interval as the confidence level is
increased. Does this result seem reasonable? Explain.
3) The average cost per night of a hotel room in Kuala Lumpur is RM273. Assuming this
estimate is based on a sample of 45 hotels and that the sample standard deviation is RM65.
a. With 95% confidence, what is the margin of error?
b. What is the 95% confidence interval estimate of the population mean?
c. Two years ago the average cost of a hotel room in Kuala Lumpur was RM229. Discuss the
change in cost over the two-year period.
4) Annual starting salaries for college graduates with degrees in business administration are
generally expected to be between RM30,ooo and RM45,000. Assume that a 95% confidence
interval estimate of the population mean annual starting salary is desired. What is the
planning value for the population standard deviation? How large a sample should be taken if
the desired margin of error is
a. RM500?
b. RM200?
c. RM100?
d. Would you recommend trying to obtain the RM100 margin of error? Explain.
5) A simple random sample of 800 elements generates a sample proportion 𝑝̅ = 0.70.
a. Provide a 90% confidence interval for the population proportion.
b. Provide a 95% confidence interval for the population proportion.
6) Fewer young people are driving. In 1983, 87% of 19-year-olds had a driver’s license. Twenty-
five years later that percentage had dropped to 75%. Suppose these results are based on a
random sample of 1200 19-year-olds in 1983 and again in 2008.
a. At 95% confidence, what is the margin of error and the interval estimate of the number of
19-year-old drivers in 1983?
b. At 95% confidence, what is the margin of error and the interval estimate of the number of
19-year-old drivers in 2008?
c. Is the margin of error the same in parts (a) and (b)? Why or why not?

Application in Microsoft Excel

(Please cross-check the answer manually and print the output from Excel)
1) The following data represent a random sample of 9 marks (out of 10) on an economics quiz.
The marks are normally distributed with a standard deviation of 2. Estimate the population
mean with 90% confidence.
7 9 7 5 4 8 3 10 9

2) Suppose that the amount of time teenagers spend weekly working at part time jobs is
normally distributed with a standard deviation of 40 minutes. A random sample of 15
teenagers was drawn, and each reported the amount of time spent at part time jobs (in
minutes). These are listed here. Determine the 95% confidence interval estimate of the
population mean.
180 130 150 165 90 130 120 60 200 180 80 240 210 150 125