1. According to the American Diabetes Association (www.diabetes.org), 46.

2% of Americans aged
60 years or older had diabetes in 2007. A recent random sample of 400 Americans aged 60 years
or older showed that 52 of them have diabetes. Using a 5% significance level, perform a test of
hypothesis to determine if the current percentage of Americans aged 60 years or older who
have diabetes is higher than that in 2007. Use both the p-value and the critical-value
approaches.

2. The variance of the SAT scores for all students who took that test this year is 5000. The variance
of the SAT scores for a random sample of 20 students from one school is equal to 3175.
a. Test at the 5% significance level whether the variance of the SAT scores for students from this
school is lower 5000. Assume that the SAT scores for all students at this school are
(approximately) normally distributed.
b. Construct the 99% confidence intervals for the variance and the standard deviation of SAT
scores for all students at this school.
3. An insurance company wants to know if the average speed at which men drive cars is greater
than that of women drivers. The company took a random sample of 54 cars driven by men on a
highway and found the mean speed to be 144 miles per hour with a standard deviation of 4.4
miles per hour. Another sample of 36 cars driven by women on the same highway gave a mean
speed of 136 miles per hour with a standard deviation of 5 miles per hour. Assume that the
speeds at which all men and all women drive cars on this highway are both normally distributed
with an equal population standard deviation.

a. Construct a 98% confidence interval for the difference between the mean speeds of cars driven by all
men and all women on this highway.

b. Test at the 1% significance level whether the mean speed of cars driven by all men drivers on this
highway is greater than that of cars driven by all women drivers.

4. A study in the July 7, 2009, issue of USA TODAY stated that the 401(k)-participation rate among U.S.
employees of Asian heritage is 76%, whereas the participation rate among U.S. employees of Hispanic
heritage is 66%. Suppose that these results were based on random samples of 100 U.S. employees from
each group.

a. Using the 2.5% significance level, can you conclude that the 401(k) participation rates are different for
all U.S. employees of Asian heritage and all U.S. employees of Hispanic heritage?

Bonus: The manufacturer of a certain brand of auto batteries claims that the mean life of these batteries
is 40 months. A consumer protection agency that wants to check this claim took a random sample of 24
such batteries and found that the mean life for this sample is 42 months. The lives of all such batteries
have a population standard deviation of 4.5 months. Perform a hypothesis test at 10% significance level
and state your decision using critical value approach.