Faculty of Higher Education

Assignment Cover Sheet

Unit Code H16007

Unit Name STATISTICS FOR BUSINESS DECISIONS

Assignment Number TUTORIAL QUESTIONS 2

Due Date 19 -05-2020

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1. This assignment is our own work. We have acknowledged and disclosed any assistance received in its
preparation and cited all sources from which data, ideas, words (whether quoted directly or
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2. This assignment was prepared specifically for this unit only.

3. The reference list is truthful and accurate and in Harvard referencing style.

Student name/s & ID LECTURER NO OF QUES SUBMITTED

JATINDER SINGH( Dy80290) 1,2,3,4,5
 Table of Contents
Answer to Question 2 (Week 7).................................................................................................2

Part A.....................................................................................................................................2

Part B......................................................................................................................................2

Answer to Question1 (Week 8)..................................................................................................4

Part A.....................................................................................................................................4

Answer to Question3 (Week 9)..................................................................................................6

Part A.....................................................................................................................................6

Part B......................................................................................................................................7

Part C......................................................................................................................................7

Answer to Question2 (Week 10)................................................................................................8

Part A.....................................................................................................................................8

Part B......................................................................................................................................9

Answer to Question 3 (Week 11).............................................................................................10

Part (A).................................................................................................................................11

Part B....................................................................................................................................12

Reference..................................................................................................................................13
ANS TO QUES 2 :
GIVEN THAT ,
N= 400
X=80
POINT ESTIMATE =SAMPLE PROPORTION = P^ = X/N= 80/400
1-P^ = 1- 0.2 = 0.8

AT 95% CONFIDENCE LEVEL

α = 1 – 95%

α = 1 – 0.95 = 0.05

α/2 = 0.025

Zα/2= Z0.025 =1.96

ANS A :
MARGIN OF ERROR =E =Zα/2*√(P*(1-P))/N
= 1.96(√(0.2*(0.8)/400

= 0.0392

A 95% CONFIDENCE INTERVALFOR POPULATION PROPORTION P IS

P^ - E < P<P^ + E

0.2 – 0.03982 < P<0.2 +0.0392

0.1608 < P < 0.2392

(0.1608,0.2392 )

THE 95% CONFIDENCE INTERVAL FOR POPULATION PROPORTION P IS

0.168

ANS B :

MARGIN SIZE = N = (Zα / 2 / E) 2*P^*(1-P)

= ( 1.96 / 0.04 ) 2*0.2*0.8

= 384.16
SAMPLE SIZE = N=384

ANS TO QUES 1

TO TEST THE HYPOTHESIES IS THAT THERE HAS BEEN A SIGNIFICANT

INCREASE IN THE STARTING SALARIES $ 48400 AT 5% LEVEL OF
SIGNIFICANCE .

ANS A :

THE UNIT AND ALTERNATIVE HYPOTHESIES IS

H o : µ = $ 48400

Ha : µ = > $ 48400

ANS B

THE Z TEST STATISTICS IS

BY USING MINITAB , WE FIND Z TEST STATISTICS BY THE FOLLOWING

STEPS IS :

TEST OF = 48400 VS > 48400

MU

THE ASSURED STANDARD DEVIATION = 8000

95%
LOWER

N MEAN SE MEAN BOUND Z P

100 50000 800 48684 2.00 0.023

FROM THE MINITAB OUTPUT , THE Z TEST STATISTICS IS 2.00

ANS TO C :

THE CRITICAL VALUE OF TEST STATISTICS IS

FROM THE STANDARD NORMAL TABLE . THE CRITICAL FOR RIGHT TAIL
AT 95% CONFIDENCE IS 1.645 .

THE CRITICAL VALUE OF TEST STATISTICS IS 1.645

AND TO QUES D

THE Z VALUE CORRESPOMDS TO SAMPLE STATISTICS FALLS IN

CRITICAL REGION ,SO THE NULL HYPOTHESIES IS REJECTED AT 5%
LEVEL OF SIGNIFICANCE .THERE IS SUFFICIENT EVIDENCE TO INDICATE
THAT THERE HAS BEEN A SIGNIFICANT INCREASE IN THE STARTING
SALRIES $ 48400 . THE RESULT IS STATISTICALLY SIGNIFICANT

ANS TO QUES E

THE P VALUE FOR THIS TEST IS

FROM THE MINITAB OUTPUT IN PART (B) .THE P FOR THIS TEST IS 0.023

ANS TO QUES 3 :

SOURCE OF SS DF MS F
VARIATION

BETWEEN 32 3-1=2 16 16/9.7778

GROUPS

WITHIN 58 9 9.777 =1.6364

GROUPS

TOTAL 110 12-1 =11

ANS A
 Ho: TRUE MEAN PROCESS VALUES ARE

SAME FOR THE 3

PROCESSES

H1 : ATLEST DIFFERS FROM THE OTHERS

ONE TRUES
PROCESS
MEAN

ANS B :

THE TEST STATISTICS IS

F = MS ( BETWEEN ) GROUPS / MS WITHIN GROUPS

SIGNIFICANCE LEVEL = 5

HYPOTHESIES IF F> F 0.05,2,9

P value = p ( f > Fobs) IF P = VALUE < 0.05

WE REJECT THE NULL HYPOTHESIES

ANS TO PART C :

TEST STATISTICS = Fobs =1.6364

ANS TO PART D :
F0.05,2,9 = 4.2565 = F(CRITICAL)
WE REJECT THE NULL HYPOTHESIES AT 5% . ALSO P VALUE <0.05 =
EVIDENCE IS NOT ENOUGH TO CONCLUDE THAT TRUE MEAN PROCESS
VALUES DIFFER SIGNIFICANTLY

ANS TO QUES 2
Here the explanatory variable is total wealth (in dollars) and age (in years) is the
response variable.

PART A :

The regression equation will be of the form,

y=β0+β1x+e  ,
Now, we have to estimate the coefficients of the equation using least square method.

Applying least square method,

β1=covx,ySx2 and β0=y-β1x

X=1ni=1nxi, Y=1ni=1nyi
Now, we have the estimated values as,

45.2159
β0

5.3265
β1
The estimated regression equation is,

(Total wealth) y = 45.2159+5.3265 x (Age)

PART B :

Now, we have to estimate the total wealth when a person is 50 years old. We replace
x=50

Then, the estimated wealth =311.5409 dollars.

PART C :

The coefficient of determination is given by,

r2=SxySxxSyy

Sxx=1n-1i(xi-x)2  =sample variance of x

Syy=1n-1i(yi-y)2  = sample variance of y

covx,y=1nixiyi-xy  = population covariance b/w x

and y.

Sxy=1n-1ixiyi-xy  =sample covariance b/w x and y

The value of the coefficient of determination =0.9146

Interpretation:
          91.46% of the total variability is explained by the estimated regression model.

PART D :

          Now, we want to test whether there is a significant relationship between wealth
and age at the 10% significance level.

Hypothesis to be tested:
          We want to test,

i)H01:the model with no independent variables fits the data

H11:not H01

ii)H02:β0=0 ag. H12:β0≠0

iii)H03:β1=0 ag. H13:β1≠0
Test Statistics:

i)The test statistic for testing H01  ag. H11  is given by,

F=MS due to regressionMS due to residual  

follows Fα;1.6

ii) The test statistic for testing H02  ag. H12  is given by,
The appropriate test statistic for testing H02  is, t1=β0-β0SE(β0) follows t

distribution with degrees of freedom, under the null hypothesis H02  .

iii)The test statistic for testing H03  ag. H13  is given by,

The appropriate test statistic for testing H03  is, t2=β1-β1SE(β1)  

follows t distribution with degrees of freedom, under the null hypothesis H03  .

Calculations:

F=51907.64840.3936=61.7658

t1=45.215939.8049=1.1359

t2=5.32650.6777=7.8596

Critical values:

We take α=0.05.
Then F0.05;1.6=5.9873

t0.05;6=1.9432

Here to calculate the critical value we use Excel .Inv() function.

Conclusion:
Here, the value of F statistic is greater than the critical value, hence we reject the null
hypothesis and conclude on the basis of the given data that the model fits the data
moderately.

And, |t1|  < t-critical and |t2|  >t-critical.

Hence, we accept that, β0=0 and β1 is not equal to zero

 . i.e. the age has significant effect in

predicting the wealth but the intercept has no significant effect in predicting the wealth.

ANS TO QUES 3 :
A STUDENT USED MULTIPLE REGRESSION ANALYSIES TO STUDY HOW FAMILY
SPENDING Y IS INFLUENCED BY IN COME X1 , FAMILY SZE X2 , AND ADDITIONS
TO SAVINGS X3 .

WHERE E IS THE ERROR

AFTER RUNNING REGRESSION THE FOLLOWING ANOVA TABLE IS OBTAINED :

DF SS MS F SIGNIFICANCE
OF F

REGRESSION 3 137.89 45.96 64.28 2.9307E - 07

ERROR 11 28.82 2.6

TOTAL 14 166.73

ANOVA (TABLE)

THE SUM OF SQUARES ARE CALCULATED AS SS = MS* DF

WE ALSO HAVE THE FOLLOWING TABLE :

COEFFICIEN STANDARD T STAT P VALUE

T ERROR
INTERCEPT 0.0136

X1 0.7992 0.074 10.8 3.4086-07

X2 0.2280 0.190 1.2 0.255

X3 -0.5796 0.920 -0.63 0.5145

TABLE 2
where   .
a) The estimated regression equation is

b) The strength of the relationship is significant as the p-value in the table 1 is less than
0.05. Therefore we can say the regression is significant to Y .
c) From table 2 , we can see the p-value of only the independent variable X1 is less
than 0.05, therefore we can say Y is significantly related to X1. But for the other
independent variables X2 & X3, the p-values are greater than 0.05 and hence X2 &
X3 are not significant to Y.
d) X3 and Y are not significantly related.
e) As most of the part of Total SS is explained by the regression, therefore we would
expect a coefficient of determination to be close to 1.0 .

Coefficient of determination = 

REFERENCE :

https://www.investopedia.com/terms/c/confidenceinterval.asp

https://www.technopolis.fi/app/uploads/2017/02/FinancialStatements_2016-ID-181640.pdf

http://www.businessdictionary.com/definition/hypothesis-statement.html#:~:text=A
%20proposed%20answer%20to%20a,whether%20the%20relationship%20holds%20true.

https://www.statisticshowto.com/standardized-test-statistic/#:~:text=Standardized%20test
%20statistics%20are%20used,%2Dscores%20and%20t%2Dscores.

https://study.com/academy/lesson/what-is-a-null-hypothesis-definition-
examples.html#:~:text=A%20null%20hypothesis%20is%20a%20hypothesis%20that%20says
%20there%20is,signi

https://www.britannica.com/science/estimated-regression-equation#:~:text=Using%20these
%20estimates%2C%20an%20estimated,relationship%20between%20y%20and%20x.