Question 1

Which of the following should be plotted using a pie chart

a. Number of accidents recorded daily at an intersection
b. Number of coffee consumed in a day
c. Market share of five competing internet providers
d. Income recorded in thousands of dollars

Hint: Refer to slide 6 from the revision slide deck

A company has been marketing a new frozen food. They are interested in how effective their
marketing campaign has been, and want to find out what sorts of people have tried the product.
Exhibit 1 depicts the contingency table of two factors: whether the respondent has tried the product
(Yes or No) and the respondent’s income category.

Question 2
The probability that a randomly chosen person earns 75,000 or more is
a. 13.08%
b. 7.24%
c. 36.22%
d. 5.84%

Answer = 7.24%+5.84% = 13.08%

We need to include the marginal probability of those earning between 75,000-100,000 and over
10,000
Refer to slides 9 to 10 from the revision slide deck

Question 3
The probability that a randomly chosen person earns 75,000 or more, and has tried the new
frozen food product is
a. 4.67%
b. 21.96%
c. 8.88%
d. 4.21%

Answer = 4.67%+4.21% = 8.88%

We need to include the joint probability of those earning between 75,000-100,000 and over 100,000
Refer to slides 9 to 10 from the revision slide deck

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Question 4
The probability that a person who earns 75,000 or more, has tried the frozen food product is
a. 147.30%
b. 64.50%
c. 72.09%
d. 67.89%

Hint: Refer to slides 9-10 from the revision slide deck

This is a conditional probability.
P(Yes, the person has tried the product | the person earns more than 75,000)

𝑃(𝐴 𝑎𝑛𝑑 𝐵) 𝑃(𝑌𝑒𝑠 𝑡ℎ𝑒 𝑝𝑒𝑟𝑠𝑜𝑛 ℎ𝑎𝑠 𝑡𝑟𝑖𝑒𝑑 𝑡ℎ𝑒 𝑝𝑟𝑜𝑑𝑢𝑐𝑡 𝐴𝑁𝐷 𝑡ℎ𝑒 𝑝𝑒𝑟𝑠𝑜𝑛 𝑒𝑎𝑟𝑛𝑠 𝑚𝑜𝑟𝑒 𝑡ℎ𝑎𝑛 75,000 )
P(A |B) = =
𝑃(𝐴) 𝑃(𝑡ℎ𝑒 𝑝𝑒𝑟𝑠𝑜𝑛 𝑒𝑎𝑟𝑛𝑠 𝑚𝑜𝑟𝑒 𝑡ℎ𝑎𝑛 75,000 )

8.88%
=
13.08%

= 67.89%
Refer to slides 9 to 10 from the revision slide deck

Question 5
The probability that a person who earns less than 25,000 has tried the frozen food is
a. 12.62%
b. 50.22%
c. 49.78%
d. 12.73%

Hint: Refer to slides 9-10 from the revision slide deck

This is a conditional probability.
P(Yes, the person has tried the product | the person earns less than 25,000)

𝑃(𝐴 𝑎𝑛𝑑 𝐵) 𝑃(𝑌𝑒𝑠 𝑡ℎ𝑒 𝑝𝑒𝑟𝑠𝑜𝑛 ℎ𝑎𝑠 𝑡𝑟𝑖𝑒𝑑 𝑡ℎ𝑒 𝑝𝑟𝑜𝑑𝑢𝑐𝑡 𝐴𝑁𝐷 𝑡ℎ𝑒 𝑝𝑒𝑟𝑠𝑜𝑛 𝑒𝑎𝑟𝑛𝑠 𝑙𝑒𝑠𝑠 𝑡ℎ𝑎𝑛 25,000 )
P(A |B) = =
𝑃(𝐴) 𝑃(𝑡ℎ𝑒 𝑝𝑒𝑟𝑠𝑜𝑛 𝑒𝑎𝑟𝑛𝑠 𝑙𝑒𝑠𝑠 𝑡ℎ𝑎𝑛 25,000 )

12.73%
= 25.35%

= 50.22%
Refer to slides 9 to 10 from the revision slide deck

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 Question 6
Is the tendency to try the new frozen food product independent of the respondent’s income category?
a. No, the two factors are dependent, but we cannot assess the direction of the relationship.
b. No, the two factors are dependent. The tendency to try the new frozen product increases with
an increase in income.
c. Yes, the two factors are independent
d. No, the two factors are dependent. The tendency to try the new frozen product decreases with
an increase in income.

This can be seen from the answers in Q4 and Q5. The probability that they tried the product is higher for
those who earn more than 75,000 compared to those who earn less than 25,000

Exhibit 2 below provide descriptive statistics of the distribution of the property prices, segmented by the
age of the property.

Question 7
Which of the following statements is false about the measures of variability?
a. 75% of new houses are sold below $1.71million
b. 25% of old houses are sold below $0.9645 million
c. The range of prices for the middle 50% of old houses is larger than new houses.
d. New house prices are more variable than old house prices.

For answer (c), we refer to the IQR. IQR is higher for new houses compared to old houses.
Refer to slides 12 to 14 from the revision slide deck

Question 8
Which of the following statements is false about measures of central tendency and shape?
a. Half of the new properties are sold at $1.2 million
b. The distribution of new house prices is skewed to the left.
c. Both distributions are skewed
d. The median is a better measure of average property prices given that the distributions are
skewed.

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The distribution of new house prices is not skewed to the left as the skewness is not a negative value.
Furthermore, the mean is greater than median value, therefore indicating a positive skewness.
Refer to slides 12 to 14 from the revision slide deck

Question 9
Analyse the summary statistics table above to compare the price distribution of new and old houses.
Prices are recorded in thousands of dollars. Which TWO of the following statement(s) are FALSE?
a. 50% of old houses cost less than $1.175million.
b. The price distribution of new houses is less variable than the price distribution of old houses.
c. Old houses tend to be less expensive according to the measures of central location.
d. Both distributions are symmetric.

Why is answer (b) false?

The range, IQR and standard deviation for new houses is higher.

Why is answer (d) false?

Both distributions show a positive skewness.

Refer to slides 12 to 14 from the revision slide deck

Question 10
Assume that the house price ($000s) follows a normal distribution with mean $1215k and standard
deviation $419k. The probability that a randomly chosen house cost more than $1million is
___________.
a. 0.3039
b. 0.6961
c. 0.2623
d. 0.7377

P(X>1000) = 1-norm.dist(1000,1215,419,true) = 0.6961

(Hint: we use 1-norm.dist because we are trying to find the area to the right (greater than).
Refer to slide 16 from the revision slide deck

Question 11
Assume that the house price ($000s) follows a normal distribution with mean $1215k and standard
deviation $419k. Calculate the first quartile of house prices, assuming the above specified normal
distribution. The first quartile of house prices is _____________
a. 0.9977
b. $932.389
c. $-931.389
d. 0.0023

The area to the left tail is 25% (first quartile). We need to find the X value when P(X<x*) = 0.25
=norm.inv(probability,mean,standard deviation)
=norm.inv(0.25,1215,419) = 932.389
Refer to slide 16 from the revision slide deck

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Exhibit 3 depicts the sample mean, standard deviation and sample sizes of the segmented price data.

Question 12
Calculate the 95% confidence interval for the true mean price of old houses.
The upper bound / upper limit of the confidence interval is ________________
a. 1211.763
b. 1503.462
c. 1239.358
d. 1127.057

𝑋̅ = 1169.41
𝑠𝑡𝑎𝑛𝑑𝑎𝑟𝑑 𝑑𝑒𝑣𝑖𝑎𝑡𝑖𝑜𝑛 344.39
Standard error = = = 21.609
√𝑛 √254

Z =norm.s.inv(1-0.05/2) = norm.s.inv(0.975) = 1.959964

Upper bound/Upper limit = 1169.41+1.959964*21.609 = 1211.763

Refer to slide 19 from the revision slide deck

Question 13
Which of the following statements is true?
a. There is a 95% probability that old houses will cost between $1.239million and $1.503million.
b. We can be certain with 95% confidence that the true mean price for old houses is between
$1.127million and $1.212million.
c. We can be certain with 5% confidence that the true mean price for old houses is between
$1.127million and $1.212million.
d. There is a 5% probability that old houses will cost between $1.239million and $1.503million.

This refers to the interpretation of the confidence interval estimate. Refer to slide 19 from the revision
slide deck

Question 14
Conduct a hypothesis test to assess if the mean price of new houses is larger than 1.3 million. What is
the p-value?
a. 0.5487
b. 0.4513
c. 0.8554
d. 0.1446

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 𝑥̅ −𝜇0 1371.41−1300
𝑇𝑒𝑠𝑡 𝑆𝑡𝑎𝑡𝑖𝑠𝑡𝑖𝑐 = 𝑠 = 583.48 = 1.059897
√𝑛 √75
𝑝 − 𝑣𝑎𝑙𝑢𝑒 = 1 − 𝑛𝑜𝑟𝑚. 𝑠. 𝑑𝑖𝑠𝑡(1.059897, 𝑡𝑟𝑢𝑒)=0.1446

Refer to slide 24 from the revision slide deck. We use 1-norm.s.dist because this is a right tail test.

Question 15
Which two of the following statements are true? Use the significance level of 5% for all your analysis.
a. There is not enough statistical evidence to suggest that the mean price of old houses is larger
than $1.1million
b. There is not enough statistical evidence to suggest that the mean price of new houses is larger
than $1.3million
c. There is statistical evidence to suggest that the mean price of old houses is larger than
$1.1million
d. There is statistical evidence to suggest that the mean price of new houses is larger than
$1.3million

1. Since p-value>α, we cannot reject H0.Therfore, statement (b) is true.

2. If we change the hypothesised value to $1.1 million, then the test statistic value changes as
follows:
𝑥̅ −𝜇0 1371.41−1100
𝑇𝑒𝑠𝑡 𝑆𝑡𝑎𝑡𝑖𝑠𝑡𝑖𝑐 = 𝑠 = 583.48 = 4.028381
√𝑛 √75

𝑝 − 𝑣𝑎𝑙𝑢𝑒 = 1 − 𝑛𝑜𝑟𝑚. 𝑠. 𝑑𝑖𝑠𝑡(4.028381, 𝑡𝑟𝑢𝑒)=0.00002808 ≈ 0

Since p-value < α, we can reject H0. Therefore, statement (c ) is true.

Refer to slide 24 from the revision slide deck

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