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COMMUNITY COLLEGE OF CITY UNIVERSITY

Course code & title : CGE13101 Understanding Society Through Statistical Reasoning

Session : Semester A 2013-2014

Time allowed : Two hours

This paper has 13 pages. (Including this cover page and 5 pages of Appendices)

Instruction to candidates:

1. This paper consists of 2 sections.

2. Answer ALL questions in Section A and THREE questions in Section B.

3. For Section A, write the answers on the first page of the Answer Book.

4. For Section B, start each question on a new page and show sufficient working.

5. The question paper must be handed in together with the Answer Book at the end of the
examination.

This is a closed-book examination.

Candidates are allowed to use the following materials/aids: Approved calculator

Materials/aids other than those stated above are not permitted. Candidates will be
subject to disciplinary action if any unauthorized materials or aids are found on them.

Special materials (other than standard materials e.g. answer book or


supplementary sheets) to be supplied to students:

Nil

Seat Number : __________________________


Student Name : __________________________
Student Number : __________________________

NOT TO BE TAKEN AWAY


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Section A: Attempt ALL questions (22 marks)

1) The City U CSC lab room has recently been enlarged to accommodate a group of 25
students. A random sample of 15 groups is selected and finds the mean number of
students per group was 24. Can we conclude that the mean number of students per
group is different from 25? Given that pvalue = 0.006 on the right tail. Which of the
following is true?
A. Reject a null hypothesis at 0.01
B. Reject an alternate hypothesis at 0.05
C. Do not reject a null hypothesis at 0.05
D. Reject a null hypothesis at 0.05 and accept a null hypotheses at 0.01

2) Which of the following is NOT true regarding the normal distribution?


A. The points of the curve meet the X-axis at z = 3 and z = 3
B. It has a single peak
C. It is symmetrical
D. Mean, median and mode are all equal

3) Which of the following is an example of hypothesis testing?


A. A manager wants to know the number of years of education obtained by his ten
employees
B. A business magazine reports the income of the ten highest-paid CEOs in the
Hong Kong
C. A marketing executive wants to know there is one out of five people in Hong
Kong recognizing her products slogan
D. A sales representative prepares a pie chart showing volume of sales for the last
eight quarters

4) Which of the following are we unlikely to know when conducting a test of hypothesis?
A. sample standard deviation
B population standard deviation
C. population mean
D. sample mean

5) Which of the following is true about response rates for sample surveys?
A. The longer the questionnaire, the lower the response rate.
B. Mail surveys usually produce lower response rates than personal interviews or
telephone surveys.
C. Question wordings can affect a response rate.
D. All of the above

6) The present value factor at X% per period at end of period 4 is 0.8227. Find the value of
X.
A. 17.73
B. 9.29
C. 5.00
D. 4.76
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7) The following set of data:

13 42 x 7 51 69 28 33 14 8

has a median of 29. What is the value of x?

A. 25
B. 30
C. 29
D. 32

8) Place $10,000 on a 3-month term deposit at simple interest, interest rate at 12% per
annum, the maturity amount is ____________; but if interest is paid monthly
compounding, the maturity amount would be ____________.

A. $10,300, $10,303.01
B. $11,200, $10,303.01
C. $11,200, $14,049.28
D. $10,201, $10,300

9) When Gini coefficient equals to 1, it means

A. it is line of prefect inequality


B. one person possessing all income of a society
C. all people in a society receiving equal amount of the income
D. the most fair income distribution in a society

10) Besides measuring change in the prices of goods and services, the consumer price index
has a number of other applications such as:

A. To determine real disposable personal income


B. To deflate sales or other data series
C. To find the purchasing power of the dollar
D. All of the above

11) What is our decision regarding the differences between the observed and expected
frequencies if the critical value of chi-square is 9.488 and the computed value is 6.079?

A. The difference is probably due to sampling error; do not reject the null hypothesis
B. Not due to chance; reject the null hypothesis
C. Not due to chance; do not reject the alternate hypothesis
D. Too close; reserve judgment
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Section B: Attempt any THREE questions (78 marks)

Question 1 (26 marks)

The policy of a banking corporation is to open an additional teller counter if the average
customer waiting time is over 15 minutes. A random sample of 120 customers from one of
its bank offices shows a mean customer waiting time of 15.4 minutes and a standard
deviation of 3 minutes.

(a) Do these statistics provide sufficient evidence to justify the opening of an additional
teller counter in this bank office? Apply the p-value approach of hypothesis testing
and use a 0.05 level of significance. (10 marks)

(b) Briefly describe Type I and Type II errors and their implications to the situation.
(8 marks)

(c) What assumption is necessary before conducting a test of hypothesis? (2 marks)

(d) Briefly describe how to select the test statistics in (a). (6 marks)
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Question 2 (26 marks)

(a) Distinguish between:

(i) Population and Sample; (4 marks)


(ii) Parameter and Statistics; (4 marks)
(iii) Stratified sampling and cluster sampling. (6 marks)

(b) The researcher of a large company, Tom, would like to study the employees absence
behavior due to illness. In total, there are 9 departments in the company and the
number of employee in each department is different.

He believes that the absence behavior between each department is similar but the
individual employee absence behavior is different within each department.

So, he randomly selected 4 departments and randomly selected 15 employees from


each department. Then, he recorded how many days each of them had been absent
due to illness in the past two months as follows:

1 1 4 2 0 1 0 0 2 1 1 1
0 0 2 3 5 2 2 1 3 6 3 1
0 1 1 1 0 2 2 1 3 2 1 0
1 3 5 5 8 3 1 1 3 2 2 0
1 3 1 1 0 0 0 1 3 2 4 1

Its frequency distribution is formed as below:


number of days absent Number of employees
0 12
1 21
2 11
3 9
4 2
5 3
6 1
7 0
8 1
Total 60

(iv) State the Population of the study. (2 mark)

(v) State the sampling method which had been used to draw the sample
employees. (2 mark)

(vi) Determine the mean, the median, the mode and coefficient of variation (CV)
of the above distribution. Briefly comment on them. (8 marks)
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Question 3 (26 marks)

A social scientist sampled 140 people and classified them according to income level and
whether or not they involved mark six in the last month. The sample information is reported
below. Is it reasonable to conclude that involvement in mark six is related to income level?
Use the 0.05 significance level.

Income
Low Medium High
Involved 46 28 21
Did not involve 14 12 19

(a) What is the table called? (2 marks)

(b) State the null and alternative hypothesis. (4 marks)

(c) What is the decision rule? State three characteristics of chi-square distribution.
(8 marks)

(d) Preform necessary calculation to determine the test statistics. (8 marks)

(e) Make a decision on the null hypothesis. Interpret the result. (4 marks)
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Question 4 (26 marks)

(a)
Data below was collected between 1990 and 2010 from an Asian country. CPI, labor force,
productivity, and the price of a 1000 ft2 apartment were collected. Note in the table that the
CPI has a base period of 1995 and Productivity Index in Manufacturing has a base period of
2000. Direct comparison is not feasible.

Productivity Index in Price of 1000 ft2


CPI Total Labor Force
Year Manufacturing apartment
1995 = 100 (millions)
1995=100 ($1,000)
1990 72.1 64 64.9 286.2
1995 100.0 81 89.7 789.6
2000 121.3 87 100.0 1,063.4
2005 161.2 95 114.9 1,516.3
2010 246.8 107 146.6 2,626.0

(i) Make whatever calculations are necessary to compare the trend in the four
series from 1990-2010. (8 marks)

(ii) Interpret the results. (5 marks)

(b) The same country described in (a) has the following factual information:
The Gini coefficient is 0.533 in 2012
The Human Development Index ranked 13 out of 186 countries in 2012
The poverty line has been set at 50% of median household income
There are nearly 14% of the population below the poverty line
Nearly half of the citizens under poverty line actually belongs to working
class

(iii) What are Gini coefficient, Human Development Index and Poverty Line?
Briefly describe each of them. (6 marks)

(iv) Comment on the social situation of the country. (7 marks)


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Question 5 (26 marks)

(a) You seek finance to support your annual tuition fee $60,000 payable at the beginning
of an academic year. The bank would lend you the amount charging interest at 2%
per month, and you are required to repay the loan by 12 monthly installments
payable at the end of each month. From Table A-2 Present value of an annuity of $1
per period at 2% for10 periods =8.9826, for11 periods =9.7868, and for 12 periods
=10.5753.

(i) Find the monthly installment payable at the end of each month. (3 marks)

(ii) If you are required to pay the 12 monthly installments at the beginning of
each month instead, find the monthly installment amount. (3 marks)

(iii) Based on the repayment as stated in (i) above, the bank now offers you either
one of the following gift/benefit: (1) cash cheque of $5388, or (2) waiver of
the first monthly installment. Which of the gift/benefit would you take?
(6 marks)

(b) You want to borrow about $38,000 from a bank for refurbishing the kitchen at your
home. The bank offers you two plans, both charging interest at 2% per month.

Plan A: Repay by 12 monthly installments of $3,500 each, payable at the end of each
month.
Plan B: Repay by 11 monthly installments of $2,600 each, payable at the end of each
month, plus a final repayment $14,000 at the end of the 12th month.
Both repayment plans are acceptable because you find no difficulties in fulfilling the
repayment schedules. You want the plan that supports a larger loan amount.
From Table A-2 Present value of an annuity of $1 per period at 2% for 11 periods
=9.7868, and for 12 periods =10.5753.

(i) Supporting with figures, explain which plan would you prefer? (10 marks)

(ii) After you have decided borrow from the bank either by Plan A or Plan B, you
realize that you might need an extra loan of$10,000 to cover for unexpected
costs to be occurred in the kitchen refurbishing work. You would like to
repay the loan by 10 monthly installments payable at the end of each month.
The bank quotes you monthly installment $1,080, charging you interest at the
most favorable rate, less than 2% per month. Supporting with figures, explain
whether the interest rate is less than 2% per month.
(4 marks)

----- END ----


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Appendix 1 Areas under the standard normal probability


distribution between the mean and positive values of Z*.

Z 0.00 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 0.09
0.0 0.0000 0.0040 0.0080 0.0120 0.0160 0.0199 0.0239 0.0279 0.0319 0.0359
0.1 0.0398 0.0438 0.0478 0.0517 0.0557 0.0596 0.0636 0.0675 0.0714 0.0753
0.2 0.0793 0.0832 0.0871 0.0910 0.0948 0.0987 0.1026 0.1064 0.1103 0.1141
0.3 0.1179 0.1217 0.1255 0.1293 0.1331 0.1368 0.1406 0.1443 0.1480 0.1517
0.4 0.1554 0.1591 0.1628 0.1664 0.1700 0.1736 0.1772 0.1808 0.1844 0.1879
0.5 0.1915 0.1950 0.1985 0.2019 0.2054 0.2088 0.2123 0.2157 0.2190 0.2224
0.6 0.2257 0.2291 0.2324 0.2357 0.2389 0.2422 0.2454 0.2486 0.2517 0.2549
0.7 0.2580 0.2611 0.2642 0.2673 0.2704 0.2734 0.2764 0.2794 0.2823 0.2852
0.8 0.2881 0.2910 0.2939 0.2967 0.2995 0.3023 0.3051 0.3078 0.3106 0.3133
0.9 0.3159 0.3186 0.3212 0.3238 0.3264 0.3289 0.3315 0.3340 0.3365 0.3389
1.0 0.3413 0.3438 0.3461 0.3485 0.3508 0.3531 0.3554 0.3577 0.3599 0.3621
1.1 0.3643 0.3665 0.3686 0.3708 0.3729 0.3749 0.3770 0.3790 0.3810 0.3830
1.2 0.3849 0.3869 0.3888 0.3907 0.3925 0.3944 0.3962 0.3980 0.3997 0.4015
1.3 0.4032 0.4049 0.4066 0.4082 0.4099 0.4115 0.4131 0.4147 0.4162 0.4177
1.4 0.4192 0.4207 0.4222 0.4236 0.4251 0.4265 0.4279 0.4292 0.4306 0.4319
1.5 0.4332 0.4345 0.4357 0.4370 0.4382 0.4394 0.4406 0.4418 0.4429 0.4441
1.6 0.4452 0.4463 0.4474 0.4484 0.4495 0.4505 0.4515 0.4525 0.4535 0.4545
1.7 0.4554 0.4564 0.4573 0.4582 0.4591 0.4599 0.4608 0.4616 0.4625 0.4633
1.8 0.4641 0.4649 0.4656 0.4664 0.4671 0.4678 0.4686 0.4693 0.4699 0.4706
1.9 0.4713 0.4719 0.4726 0.4732 0.4738 0.4744 0.4750 0.4756 0.4761 0.4767
2.0 0.4772 0.4778 0.4783 0.4788 0.4793 0.4798 0.4803 0.4808 0.4812 0.4817
2.1 0.4821 0.4826 0.4830 0.4834 0.4838 0.4842 0.4846 0.4850 0.4854 0.4857
2.2 0.4861 0.4864 0.4868 0.4871 0.4875 0.4878 0.4881 0.4884 0.4887 0.4890
2.3 0.4893 0.4896 0.4898 0.4901 0.4904 0.4906 0.4909 0.4911 0.4913 0.4916
2.4 0.4918 0.4920 0.4922 0.4925 0.4927 0.4929 0.4931 0.4932 0.4934 0.4936
2.5 0.4938 0.4940 0.4941 0.4943 0.4945 0.4946 0.4948 0.4949 0.4951 0.4952
2.6 0.4953 0.4955 0.4956 0.4957 0.4959 0.4960 0.4961 0.4962 0.4963 0.4964
2.7 0.4965 0.4966 0.4967 0.4968 0.4969 0.4970 0.4971 0.4972 0.4973 0.4974
2.8 0.4974 0.4975 0.4976 0.4977 0.4977 0.4978 0.4979 0.4979 0.4980 0.4981
2.9 0.4981 0.4982 0.4982 0.4983 0.4984 0.4984 0.4985 0.4985 0.4986 0.4986
3.0 0.4987 0.4987 0.4987 0.4988 0.4988 0.4989 0.4989 0.4989 0.4990 0.4990

x
Z =

Z
!
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Appendix!II!!!!!T+distribution!Table!
!
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Appendix!III!!!!!
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Appendix!IV!!!!Financial!Mathematics!Tables!

!
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Appendix!V!!!!

X
X=
n

2 ( X X ) 2
s =
n 1

s
CV = (100%)
X
Gini Coefficient: A/(A+B)

1 ! yi $ ! yi $
I= # & ln # &
n i "y% "y%

value
index number = 100
base number

CPI at time B
dollars at time B = dollars at time A
CPI at time A

x p
z= z=
n (1 )
n

2
# nij Eij %
Ri C j Test statistic: = = $
2 &
Eij = Eij
n