This Study Resource Was: Due at Noon On Friday, March 16, 2007

Concordia University
Department of Economics
ECON 221/4 – Sections AA, B, E

Instructors: M. DaPalma, V. Terekhov, G. Tsoublekas
Winter 2007 - ASSIGNMENT 3 - ANSWERS
Due at noon on Friday, March 16, 2007
Name: I.D. Section:
1. The search committee of a board is considering six different candidates to complete the positions vacated by three
of its oldest members. Excepting for their ages, which run as 41, 39, 35, 35, 34, and 38, the qualifications of the
candidates are very similar. Therefore, the three new board members are to be chosen at random. (20 points)
[The calculations for (b), (c), and (d) below must be done on Excel and pasted in the spaces provided here.]
a. How many samples (possible groups) of three candidates can be made? (3 points)
6!
C 36 = = 20 possible samples (groups) of three candidates
3!3!
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b. List all possible samples (three-member groups) with their mean age. (4 points)
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c. Find the probability function of the sampling distribution of the sample mean and calculate its mean and
variance. (5 points)
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From the distribution of the sample means above, we get E ( X ) = µ = ∑ X i * P ( X ) = 37
We also get σ X = ∑ ( X i − µ ) * P ( X ) = 1.27 ⇒ σ X = 1.1255

2 2
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d. Calculate the population mean and population standard deviation of the age of all candidates. (4 pts)
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∑X 222
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µ=
i
The mean of the population distribution is = = 37
N 6
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And the variance is σ 2

=
∑(X i − µ)2
=
38
= 6.33 ⇒ σ = 2.5166
N 6
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e. Verify the relationship between the standard deviation of the population (found in d) and the standard error of
the sampling distribution of the sample mean (found in c). (4 points)
The relationship between the variance of the population and the variance of the sample mean (while
also considering that the population here is finite and therefore we have to also include in the
σ2 N −n
variance formula the finite population correction factor) is shown by σ X2 = .
n N −1
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Plugging the numbers from (d) above in the formula than links the population standard deviation with the
standard error of the sampling distribution we get
σ N − n 2.5166 6 − 3 2.5166
σX = = = * 0.6 = 1.453 * 0.7746 = 1.1255 ,
n N −1 3 6 − 1 1.732
which is equal to what we have found in (c) above.
2. The scores of all applicants taking an aptitude test required by a law school have a normal distribution with mean
420 and standard deviation 100. (35 points)
a. What is the probability that a randomly selected applicant will achieve a score of more than 450? (3
points)
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Here, μ = 420 and σ = 100
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X i − µ 450 − 420
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P( Z > = = 0.3) P(Z > 0.3) = 0.5 – 0.1179 = 0.3821 or 38.21%
σ 100
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b. What is the probability that two randomly (and independently) selected applicants will achieve a
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score of more than 450? (3 points)

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P ( >450 ∩ >450 ) = 0.3821 * 0.3821 = 0.1460 or 14.6%

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c.What is the probability that out of two randomly (and independently) selected applicants, at least one
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will achieve a score of more than 450? (3 points)

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We know that P( > 450) = 0.3821. Therefore, P( < 450) = 0.6179
n!
P x (1 − P ) n − x we get the following expression
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Using the binomial formula

x!(n − x)!
2!
P (1 ∪ 2) = 1 − * 0.38210 * 0.6179 2 = 1 − 0.3818 = 0.6182
0!(2 − 0)!
The probability that at least one of the two applicants will achieve a score of more that 450 is 61.8%.
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d. What is the probability that the mean of a random sample of 25 applicants is bigger than 450? (3 points)
Here μ = 420, σ = 100, n = 25, and X = 450
 
 
 X − µ 450 − 420 30 
P Z> = = = P ( Z > 1.5) = 0.5 − 0.4332 = 0.0668 or 6.68%
 σ 100 20 
 
 n 25 
e. What is the probability that the sample mean score is between 400 and 450? (3 points)
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 
 
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 400 − 420 450 − 420 
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P <Z< = P (−1.0 < Z < 1.5) = 0.3413 + 0.4332 = 0.7745
 100 100 
 
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 25 25 
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f. The probability is .10 that the sample mean score is bigger than what number? (4 points)
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X − 420
1.28 = ⇒ X = 445.60
P(Z > 1.28) = 0.1, 100
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g. The probability is .75 that the sample mean score is less than what number? (4 points)
X − 420
0.675 = ⇒ X = 433.50
P(Z < 0.675) = 0.75, 100
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25
h. The probability is .05 that the sample standard deviation of the scores is bigger than what number? (4 points)
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(25 − 1) s x2
Pχ( 2
24 )
> 36.42 = 0.05 36.42 =
(100) 2
s x = 15175 = 123.1868
i. The probability is .05 that the sample standard deviation of the scores is less than what number? (4 points)
(25 − 1) s x2
Pχ( 2
24 )
< 13.85 = 0.05 13.85 =
(100) 2
s x = 5770.833 = 75.966
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j. If a sample of 50 test scores had been taken, would the probability of a sample mean score bigger than 450 be
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smaller than, larger than, or the same as the correct answer to part (d) above? Along with your calculations,
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sketch a graph to illustrate your reasoning. (4 points)
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A sample of 50 is larger than the currently used. This implies that the distribution of the sample means is
relatively less dispersed. Therefore, the probability of being beyond a certain value (the area under the
curve) becomes smaller.
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450 − 420
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Therefore, P(Z > 100 ) = P(Z > 2.12) = 0.5 – 0.483 = 0.017 or 1.7%
50
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n = 50
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n = 25
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3. A restaurant chain company regularly surveys its customers. On the basis of these surveys, the
management of the chain claims that 75% of its customers rates the food as excellent. A consumer testing
service wants to examine the claim by asking 468 customers to rate the food. (15 points)
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a. What is the probability that less than 70% will rate the food as excellent? (3 points)
p −π 0.7 − 0.75 − 0.05 − 0.05

Z= = = = = −2.5
π (1 − π ) 0.75 * 0.25 0.0004 0.02 and P(Z< – 2.5) = 0.0062
n 468
The probability that less than 70% will rate the food as excellent is only 0.62% (less than 1%).
b. There is 80% chance that sample proportion of satisfied clients is bigger than what amount? (4
points)
p − 0.75
− 0.84 = ⇒ p = 0.75 − 0.0168 = 0.7332
P(Z > -0.84) = 0.8, 0.75 * 0.25
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There is 80% probability that the proportion of satisfied clients of a sample of 468 will be above(or at least)
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73.3%.
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c. There is 90% chance that sample proportion of satisfied clients will be less than what amount? (4
points)
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p − 0.75
1.28 = ⇒ p = 0.75 + 0.0256 = 0.7756
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P(Z < 1.28) = 0.9, 0.75 * 0.25

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468
There is 90% probability that the proportion of satisfied clients of a sample of 468 will be below (or up to)
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77.56%.
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d. The probability is .7 that the sample proportion differs from the population mean (population
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proportion) by how much? (4 points)
Difference
1.04 = ⇒ Difference = ±0.0208
P( – 1.04 < Z < 1.04) = 0.7, 0.75 * 0.25
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468
There is 70% probability that the proportion of satisfied clients of a sample of 468 will differ from the
population proportion by no more than 2.08 percentage points.
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4. A production process manufactures electronic components with timing signals whose duration follows a normal
distribution. A random sample of six components was taken, and the durations of their timing signals were
measured. (10 points)
a. What is the probability that the sample variance is more than twice the population variance? (3 points)
 ( n − 1) s x2 
( )
P s x2 ≥ 2σ x2 = P χ (25) = ≥ 5 * 2  = 0.08
 σx2

The probability that the sample variance is more than twice the population variance is 8%.
b. What is the probability that the population variance is more than twice the sample variance? (3 points)
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 ( n − 1) s x2 5 
( )
P σ x2 ≥ 2 s x2 = P χ (25) = ≤ = 2.5  = 0.22
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 σx2
2 
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The probability that the population variance is more than twice the sample variance is 22%.
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c. The probability is 0.10 that the sample variance is less than what percentage of the population variance?
(4 points)
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 (n − 1) s x2 s x2  s x2 1.61
P χ (25) = = 5 * = 1 . 61 
 = 0 . 10 ⇒ = = 0.322
 σ x2 σ x2  σ x2 5
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There is 10% probability that the sample variance is 32.2% of the population variance.
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5. A clinic offers a weight-reduction program. A review of its records found the following weight losses, in pounds,
for a random sample of 10 of its clients at the conclusion of the program: 18.2 25.9 6.3 11.8 15.4 20.3 16.8
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19.5 12.3 17.2. (20 points)
a. Calculate the sample mean and sample standard deviation. [The necessary calculations of the sample mean
and sample variance for the confidence interval must be done on Excel and pasted below.] (4 points)
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X =
∑X i
=
163.7
= 16.37 s2 =
∑(X i − X )2
=
260.081
= 28.898 ⇒ s = 5.3757
N 10 n −1 10 − 1
b. Find a 99% confidence interval for the population mean. [The necessary calculations of the sample mean and
sample variance for the confidence interval must be done on Excel and pasted below.] (4 points)
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We must assume a normally distributed population. Then, instead of the population standard deviation we
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use the sample standard deviation and follow the t-distribution for the limits of the confidence interval.
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For 10-1=9 degrees of freedom and a 99% confidence interval, the t-cutoff points are +3.25.
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s s
X − tν ,α / 2 * < µ < X + tν ,α / 2 *
n n
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5.3757 5.3757
16.37 − 3.25 * < µ < 16.37 + 3.25 *
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10 10
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or 16.37 ± 3.25*(5.3757/3.1623) or 10.845 < μ < 21.895

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c. Find a 90% confidence interval for the population mean. (4 points)

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5.3757 5.3757
16.37 − 1.833 * < µ < 16.37 + 1.833 *
10 10
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or 16.37 ± 1.833*(5.3757/3.1623) or 13.254 < μ < 19.486

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d. Compare the two findings and offer an explanation to this effect. (4 points)
The confidence interval in (c) above is narrower than that in (b) since the t-score will be smaller for a
90% confidence interval than for a 99% confidence interval.
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e. Find a 90% confidence interval for the population variance of weight losses for clients of this weight
reduction program. (4 points)
n = 10, s 2 = 28.898, χ 29,.05 = 16.92, χ 29,.95 = 3.33
(n − 1) s 2 (n − 1) s 2
<σ < 2
2
=
χ 2 n −1,α / 2 χ n −1,1−α / 2
9(28.898) 9(28.898)
<σ2 < or 15.3713 < σ2 < 78.1027
16.92 3.33
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Concordia University

ECON 221/4 – Sections AA, B, E

Name: I.D. Section:

From the distribution of the sample means above, we get E ( X ) = µ = ∑ X i * P ( X ) = 37

We also get σ X = ∑ ( X i − µ ) * P ( X ) = 1.27 ⇒ σ X = 1.1255

And the variance is σ 2

which is equal to what we have found in (c) above.

score of more than 450? (3 points)

P ( >450 ∩ >450 ) = 0.3821 * 0.3821 = 0.1460 or 14.6%

will achieve a score of more than 450? (3 points)

We know that P( > 450) = 0.3821. Therefore, P( < 450) = 0.6179

Using the binomial formula

Here μ = 420, σ = 100, n = 25, and X = 450

p −π 0.7 − 0.75 − 0.05 − 0.05

P(Z < 1.28) = 0.9, 0.75 * 0.25

proportion) by how much? (4 points)

19.5 12.3 17.2. (20 points)

or 16.37 ± 3.25*(5.3757/3.1623) or 10.845 < μ < 21.895

c. Find a 90% confidence interval for the population mean. (4 points)

or 16.37 ± 1.833*(5.3757/3.1623) or 13.254 < μ < 19.486

n = 10, s 2 = 28.898, χ 29,.05 = 16.92, χ 29,.95 = 3.33

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