Solutions to H.W. 5 Fall 2022 B01.

1305

1) Let 𝜇𝜇 = population mean NO gm/km emissions of BMW cars

We want to test

𝐻𝐻0 : 𝜇𝜇 ≤ 0.04 versus 𝐻𝐻𝑎𝑎 : 𝜇𝜇 > 0.04

From the data, we have n=2, 𝑌𝑌� = 0.07 and S=0.041

0.07−0.04
Thus, the t calculated value is t= 0.041 = 1.034
�
√2

The p value is, as shown in the plot below, 0.2447 and so there isn’t evidence enough to
reject the null hypothesis (i.e. not enough evidence to conclude that BMW cars violate
the emissions cap)

Distribution Plot
T, df=1
0.35

0.30

0.25

0.20
Density

0.15

0.10

0.05

0.2447
0.00
0 1.034
X

2) Using R, we get n=26 S=7.09 Y = −0.37

H0 : µ = 0 Ha : µ ≠ 0

− 0.37 − 0
t= = −0.266
7.09
26
The p-value is P( t 25 < −0.266) + P( t 25 > 0.266) = 0.792 and since it is large, we do not
have evidence to reject the null hypothesis.

3)
Let 𝜇𝜇𝑀𝑀 = the population mean cost of dinner in Manhattan Zagat rated restaurants
and 𝜇𝜇𝑂𝑂 = the population mean cost of dinner in Outer Borough Zagat rated restaurants

The null and alternative hypothesis are

𝐻𝐻0 : 𝜇𝜇𝑀𝑀 − 𝜇𝜇𝑜𝑜 ≤ 0 versus 𝐻𝐻𝑎𝑎 : 𝜇𝜇𝑀𝑀 − 𝜇𝜇𝑜𝑜 = > 0

𝑌𝑌�𝑀𝑀 −𝑌𝑌�𝑜𝑜 −0 44.88−33.79

The t-statistic is 𝑡𝑡 = = 2 2
= 6.84
𝑆𝑆2 𝑆𝑆2 �20.962 +12.649
� 1+ 2 243 195
𝑛𝑛1 𝑛𝑛2

For such large values of n, we may use the Z curve directly and we get the p-value of
P(Z>6.84) = 0, thereby providing evidence to reject the null in favour of the alternative
that Manhattan based restaurants are more expensive, on average.

4)
a) The t-stat for the slope coefficient is -38.92 with a p value of 0, indicating that there is
evidence that the price and the age of the cars are linearly related
b) The predicted price for a car that is 40 months old is
16679 - 115.46*40 = 12060.6 Euros

c) The 95% PI for the price of a 40 month old car is

12060.6 +/- 2*1255.18 = (9550, 14571) Euros

d) Yes, the quoted price of 16,100 Euros does seem a bit high as it has fallen outside the
95% PI. Indeed, 16,100 is (16100-12060.6)/1255.18 = 3.21 standard deviations above
the estimated mean price for a 40 month old car, which is high

e) Yes, there are clearly a few cars that have std residuals that are more than +/- 4,
indicating that these cars are significantly over/under priced for their ages

5) The t-stat for the slope coefficient is -1.81 with a p value of 0.088. This suggest that
there is no strong evidence that the two variables are linearly related and quite weak
evidence (if one uses a 10% threshold for the p value) that there is.