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Lab 1

1.1

Minitab Questions

If you are not familiar with Minitab, please review a posted Minitab Introduction with
the link:
https://www.youtube.com/watch?v=AdugkfVlt68
The basic commands used in Minitab for this lab are
1. Calc Probability Distributions Normal, t, Binomial, . . .
2. Stat Basic Statistics Display Descriptive Statistics, . . .
3. Stat Basic Statistics 1-Sample t, 2-Sample t, Paired t, 2 Variances. . .
4. Stat Nonparametric 1-Sample Sign, . . .
5. Graph Probability Plot, . . .
Exercise:
1. Minitab: find probabilities for t-distribution
Procedure
(a) Select Calc >> Probability Distributions >> t
(b) Click the button labeled Inverse cumulative probability. (Ignore the box
labeled Noncentrality parameter. That is, leave the default value of 0 as
is.)
(c) Type in the number of degrees of freedom in the box labeled Degrees of
Freedom.
(d) Click the button labeled Input Constant. In the box, type the cumulative
probability for which you want to find the associated t-value.
(e) Select OK. The t-value will appear in the session window.
Questions
(a) Find P (T 1.44) with df=6:
Answer: P (T 1.44) with df=6: 0.1
(b) Given P (T t) = 0.40 with df=15, find the value of t
Answer: t=-0.2579
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2. You may use Minitab for confidence interval and hypothesis testing
Procedure
(a) Click on Stat>Basic Statistics >
(b) Choose >1 sample t / > 1-Sample Z etc.
(c) Input Samples in columns or Summarized data
(d) Confidence interval inoptions. The default confidence level is 95 (i.e, (1
) = 0.95).
(e) Input the value of test mean (required for test)
(f) Click on OK to obtain the 95% CI for and testing result.
Questions
(a) You randomly select 20 contracts. In the sample, the average cost is $11,850
with standard deviation s = $17, 980. Assume the cost of contract is approximately normally distributed.
i. Produce the 95%CI for the true mean cost.
ii. What is the p-value of the corresponding 2-tail test of H0 : = 0?
Answer:

95% CI for the mean is 11850 2.09302 17980


= (3435, 20265).
20
Test statistic tcalc = 2.95. With the degree of freedom 19, P-value for the
two-tail test is 2*0.0041=0.008.

1.2

Working Questions

1. (Human behaviors influenced by the moon) In a study, we obtain a sample of 20


observations, and found that the sample mean x = 2.433 and the sample standard
deviation s = 1.46. We will use s = 1.5 for our guessed standard deviation.
Compute the power of the t-test for
H0 : = 0 vs. Ha : > 0
against the alternative = 1. For a significance level = 5%.
Answer:
For n = 20 and s = 1.5, Reject region is determined by
t=

x 0
2.433 0
=

> t5%,df =19 = 1.729


s/ n
1.5/ 20
2

x > 0.59
Reject region is RR = {
x 0.59}. The power would be about 89%.
power = P (Z >

0.59 1
) = 0.89
1.5/ 20

where Z N (0, 1), since we assume = 1.5.


2. (Rates of return on a portfolio) Table 7.1 gives the rates of return for the 39 months
that the account was managed by the broker.

There are no outliers and the distribution shows no strong skewness. We are reasonably
confident that the distribution of is approximately normal, and we proceed with our
inference based on normal theory.
Are these returns compatible with a population mean of = 0.95%, the S&P average?
Answer:
The test statistic tcalc = 2.14, with df = 38, p value = 0.039, the test is significant.
If we use t-Table to approximate the p-value, we would choose df = 30(< 38), then
0.04 < p value < 0.05, which does not contain the actual p value = 0.039.
However, if we use df = 40(> 38), then 0.02 < p value < 0.04, it gives a better
approximation. In practice, the slight difference caused by df is negligible, since in all
cases, p value < 0.05.
3. (Work stress) A national survey by the National Institute for Occupational Safety and
Health on restaurant employees found that 75% said that work stress had a negative
impact on their personal lives. You investigate a restaurant chain to see if the proportion of all their employees negatively affected by work stress differs from the national
proportion p0 = 0.75. In your SRS of 100 employees, you find that 68 answered Yes
when asked, Does work stress have a negative impact on your personal life?

(a) Perform a test to test the hypotheses:


H0 : p = p0 = 0.75 vs. Ha : p 6= 0.75 (2 sided alternative)
Answer:
The test statistic zcalc = 1.62, p value = 0.106. The test is not significant.
(b) Compute a 95% confidence interval for the population proportion.
Answer: (0.59, 0.77).