UNIVERSITY OF THE WEST INDIES, ST.

AUGUSTINE CAMPUS

DEPARTMENT OF ECONOMICS ECON2025 – STATISTICAL METHOD

Semester I 2013-2014 Tutorial Sheet #4

PART A (Revision of the Concepts)

1. What is meant by the term Estimation and Hypothesis testing? What are their
importance?

2. What is meant by statistical inference?

3. Explain carefully (with reference to a suitable example), what is meant by and what is the
relationship between the following pair of terms:
i. An estimate and an estimator
ii. A point estimate and an interval estimate
iii. Sampling Distribution of Proportion and the Student-t Distribution

4. Critically evaluate what is meant by the Central Limit Theorem and explain its
significance in inferential statistic.

5. Explain what is meant by the terms:

i. Method of Moments
ii. Method of Least Squares
iii. Method of Minimum Absolute Deviation
iv. Method of Maximum Likelihood.

6. List and define four desirable conditions for an estimator of an unknown population
mean.

7. Explain what is meant by the Sampling Distribution of Proportion in the context of

random samples of size 100 drawn from a population of light bulbs and the life of each
bulb is measured to see whether it exceeds 1100 hours.

PART B (Application of the Concepts)

8. In a random sample conducted in Trinidad and Tobago by second year students from
FSS, it was found that 140 of 400 persons who were vaccinated for the Dengue disease
from UWI suffered severe side effects. Construct a 96% confidence interval for the true
proportion of persons who will experience severe side effects.

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9. The managing director of a large trans-regional company is in the process of deciding
whether to adopt a lunchtime exercise program. The purpose of such programs is to
improve the health of workers and, in so doing, reduce medical expenses. To get more
information, the managing director instituted a pilot exercise program for the employees
in one office. Using a matched pair design, the director was able to record medical
expenses for the 12 months “before” and “after” the pilot (in thousands of dollars) as
shown below.

Month Ja Feb Mar Ap May Ju Jul Au Se Oct No Dec

n r n g p v
Before Pilot
68 44 30 58 35 33 52 69 23 69 48 30
(A)
After Pilot (B) 69 42 20 62 25 30 56 62 25 75 40 26

i. Identify two point estimators for the mean medical expenses before the pilot and
after the pilot program.
ii. In your view, which of the two estimators is unbiased? Give reason(s) for your
answer.
iii. Given that sA = 16.6 and sB = 18.62, compute and interpret a 95% confidence
interval for the ratio of the variances of the medical expenses “before” and
“after” the pilot program. ALL necessary assumptions that you deem important
MUST be clearly defined.

10. A random sample of 29 with mean and standard deviation 80 and 30 respectively was
taken from a population of 1000 students. Suppose that the population from which the
sample is drawn from is not normally distributed. Find the 98% confidence interval for
the unknown population mean.

11. In a comparative study on pollution (gm/cubic meter), a random sample observation from
Saint Lucia yielded a sample mean of 66.5 with a standard deviation of 54.7 while a
similar random sample of 89 observations from Grenada yielded a sample mean of 56.3
with a standard deviation of 45.8 respectively. The researchers claim that the variance of
the pollution in Saint Lucia is at most 958 gm/cubic meter while in Grenada it is less than
1050 gm/cubic meter.
i. Compute a point estimate for the ratio of the standard deviation level of
pollution between Saint Lucia and Grenada.
ii. What can be said about the point estimator that was computed in (i)?
iii. Compute a 98% confidence for the difference in the two countries mean
pollution.
iv. Hence, test the claim that the two means are equal.

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12. Let p1 and p2 be the proportions of light bulbs that burn for more than 1100hr
manufactured by Companies A and B respectively. A random sample of size 700 bulbs
was selected from the production of Company A and another sample of size 1200 bulbs
was selected from Company B. The number of bulbs from the Company A sample that
burnt for more than 1100 hours was 49 while those for the Company B sample totalled
121.
i. Give a point estimate for the difference p1 – p2.
ii. Give a point estimate of p = p1 = p2
iii. Construct a 96% confidence interval for the difference p1 – p2.
iv. Hence test the hypothesis that the proportion of the production of bulbs that will
burn for more than 1100 hours is no different for these two companies

13. A restaurant manager wants to find out if coffee breaks affect productivity as measured
by the waiter’s check averages. Let W and H equal waiters’ check averages with and
without a coffee break respectively. Assume that the distribution of the variables W and
H are N(μw, σw) and N(μh, σh) respectively. The manager wants to test the hypothesis that
σw = σh against the alternative that σw ≠ σh. He selects a random sample of 20
observations of W and 13 observations of H. These samples yielded sample means of
9.71 and 9.51 respectively and sample standard deviations of 1.23 and 1.27 respectively,
what will be the manager’s conclusion?

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