IIMT 1640 Practice Final

Note: this practice final covers only the materials that were not included in the midterm. Our real
final is comprehensive, so you should review practice midterm as well.

1. In economic downturns, companies attempt to downsize their workforces by offering early

retirement incentives to older employees. A survey of 723 companies found that 195 engage in
such downsizing practices. The 99% confidence interval for the proportion of companies that
downsize their workforces by offering early retirement incentives is ______.

2. The number of patients entering a regional hospital in an hour follows a distribution with a
variance of 10.8. Another random sample of 80 hours is selected. Find the width of the 90%
confidence interval for the mean of the number of patients entering the regional hospital in an
hour. (Using z-interval to estimate) (Round to 3 decimal places)

3. A large metropolitan bank has analyzed the amount of time required to process home loans
and determined that the times follow a normal distribution with mean time μ=45 hours. The
bank’s operations manager has developed a new procedure for processing the loans which
involves extensive use of new computer software. He believes that the new procedure will
decrease the population mean amount of time required to process home loans. After training a
group of loan officers, a random sample of 25 loan applications will be selected and the
average amount of time required to process the loans will be determined. The information of
the sample mean amount of time is x̅=43.118 hours with the sample standard deviation s=5.5
hours; If the switch is made to the new procedure, the cost of the additional software will be
more than offset by the savings in manpower required to process the loans.

a. Set up the null hypothesis and alternative hypothesis to test the manager’s belief.
b. Which test should we use: Upper-tail test? Or Lower-tail test? Or Two-sided test?
c. Which test should we use: z-test or t-test or Chi-square test? Find the value of the
corresponding statistic (i.e., the z-statistic, or t-statistic, or the Chi-square statistic)
d. Should we reject the null hypothesis? State the conclusion you would reach for α=0.025.
e. Describe the Type I error and the Type II error in this specific context. No need to compute the
values.

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4. According to the U.S. Bureau of Labor Statistics, the average weekly earnings of a production
worker in 1997 were $424.20. Suppose a labor researcher wants to test and determine whether this
figure is still accurate today. The researcher randomly selects 70 production workers from across
the United States and obtains a representative earnings statement for one week from each. The
resulting sample average is $432.70. Assuming a population standard deviation of $32, and a 5%
level of significance, determine whether the mean weekly earnings of a production worker have
changed.

a. Set up the null hypothesis and alternative hypothesis.

b. Which test should we use: Upper-tail test? Or Lower-tail test? Or Two-sided test?
c. Which test should we use: z-test or t-test or Chi-square test? Find the value of the corresponding
statistic (i.e., the z-statistic, or t-statistic, or the Chi-square statistic)
d. Find the p-value.
e. Should we reject the null hypothesis? Use the result of (d) to explain the reason.

5. Fusion in LG7 now decides to produce gloves for which the population proportion of gloves with
defective threads is .10 (10%). A developer approaches Fusion in LG7 and claims that she has a
new source that can guarantee the following: the population proportion of gloves with defective
threads will be less than .10. To test the validity of this claim, 900 gloves provided by the
developer are selected at random and the sample proportion of defectives is computed.
Please set up the alternative hypothesis.

[Q6-Q8]
A manufacturer of household products is considering a proposal by the research department to
invest in a development program for a new “environmentally safe” laundry detergent to add to
their product line. The management believes that the proportion of consumers buying this
product is greater than .30. It is decided that a random sample of 500 consumers will be selected
and the sample proportion who indicate they will buy such a product is to be computed. This
result will be used to test the management belief.
6. State an appropriate null and alternative hypothesis for the test described above.

7. The survey results are that 160 out of 500 of the consumers indicated they will buy such a
product. What is the p-value of this hypothesis test?

8. What conclusion should be reached based on this data, given α=0.05?

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[Q9-Q13]
The editor of a higher education book publisher claims that a large part of the cost of books is the cost
of paper. This implies that larger textbooks will cost more money. As an experiment to analyze the
claim, a university student visits the bookstore and records the number of pages and the selling price
of twelve randomly selected textbooks. The corresponding calculations are given below. These data
are listed below.

Textbook Number of Pages Selling Price ($)

1 844 55
2 727 50
3 360 35
4 915 60
5 295 30
6 706 50
7 410 40
8 905 53
9 1058 65
10 865 54
11 677 42
12 912 58

Σ𝑋𝑖 =8,674 ; Σ𝑌𝑖 =592 ; Σ𝑋𝑖2 = 6,937,938 ; Σ𝑌𝑖2 = 30,428 ; Σ𝑋𝑖 𝑌𝑖 = 455,595 ; SSE=76.021

9. Determine the least squares regression line.

10. Determine the standard error of estimate s .
11. Interpret the value of the slope of the regression line.
12. Estimate the selling price for a 650 pages book.
13. Calculate a 95% prediction interval of the selling price for a 650 pages book.

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[Q14-Q16]
At a recent Allman Brothers concert, a survey was conducted that asked a random sample of 20
people their age and how many concerts they have attended since the first of the year. The following
data were collected:
An Excel output follows:

14. Determine the least squares regression line.

15. Interpret the value of the slope of the regression line.
16. Estimate the number of Allman Brothers concerts attended by a 64-year-old person.

17. To gauge the reactions of possible customers, the manufacturer of a new type of
cellular telephone displayed the product at a kiosk in a busy shopping mall. The
following table summarizes the results for the customers who stopped to look at
the phone:

Male Female
Favorable 36 18
Ambivalent 42 7
Unfavorable 29 9

The manufacturer wants to determine if the reaction to the new phone is independent of
the sex of the customer.
(a) State the null and alternative hypothesis.
(b) What is the degree of freedom of the Chi-square test statistic?
(c) Suppose the Chi-square test statistic is 5.099. Do we reject the null hypothesis at 5%
significant level?

18. The head librarian at the Library of Congress has asked her assistant for an interval estimate of
the mean number of books checked out each day. Suppose the number of books checked out
follow a normal distribution. The assistant provides the following interval estimate: from 740 to
920 books per day.

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(1) If the head librarian knows that the population standard deviation is 150 books checked out
per day, and she asked her assistant for a 95% confidence interval, approximately how large a
sample did her assistant use to determine the interval estimate?

(2) Suppose we assume now that the population is normally distributed with a mean of 830 and
standard deviation is 150. The head librarian takes a sample of 25 days. What is the probability
that its sample mean is between 800 and 890 books?