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BUSN225 TEST 4 REVIEW

SUMMARY OF TOPICS

CHAPTER 6 – THE NORMAL PROBABILITY DISTRIBUTION


1. Characteristics of the Normal distribution

2. Z-scores

3. Normal Table
4. Problems: Normal Table – MUST USE ½ Area = .5 – OPTIONAL

CHAPTER 8 – CONFIDENCE INTERVALS***


1. The three confidence interval formulas

Nn
*** If N is known, multiply the sampling standard deviation by
N 1

CHAPTER 9 – HYPOTHESIS TESTING


1. Three Hypothesis Testing formulas

No -
proportion(p)

2. Steps to solve problems

1) State the null and alternate hypotheses


2) Draw the diagram for the hypothesis test, label µ, CV, Reject Ho area, size of Reject Ho area α
3) Determine whether the Test Statistic (TS) formula is for a z-score or a t-score
4) Determine the critical value (CV) using the level of significance (α).
5) State the Decision Rule – “Reject Ho if the TS -------“
6) Calculate the Test Statistic (TS)
7) State your conclusion “Do not reject Ho. The data suggests …….. describe Ho ………”
“Reject Ho. The data suggests …….. describe H1 ………..”

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PROBLEMS

1. The student newspaper claims that 54% of students have part-time jobs. You think the percentage is high.
Taking a sample of 45 students, you find that 52% of them have part-time jobs. Using a .05 level of significance,
is the claim high?

2. The weight of ducks is normally distributed with a mean of 20lbs and a standard deviation of 2lbs. If a duck is
selected at random, what is the probability that it will weigh less than 21.67lbs?

3. Teachers at a local high school feel that they spend 21 hours extra a week on counselling students. The principal
wants to know if their claim is true. Taking a sample of 12 teachers, she finds the sample mean counseling hours
is 23 and the sample standard deviation is 2.44 hours. Using a level of significance of .02, is the teachers claim
true?

4. If the average height of a sample of 7 people was 60 inches with a sample standard deviation of 2 inches,
estimate the average height of the population using a 99% confidence level.

5. Industry statistics shows that the population standard deviation of the price of a gallon of gas is $0.03 A local gas
station claims that their average price of a gallon gas is $1.23. You feel this claim is low. Taking a sample of the
gas prices for 45 days, you find the sample average price is $1.24. Using a level of significance of .05, is the gas
station’s claim low?

6. A sample of 97 students showed that 50% of them received OSAP loans. Using a confidence level of 90%,
estimate the population percentage of students who receive OSAP loans.

7. A sample of 22 invoices is taken from the 500 invoices that the company has. The sample average amount was
$78.23 with a population standard deviation of $3.50. Using a 98% level of confidence, construct an interval
estimate for the average amount of all invoices.

8. A sample of 4 students showed their tests scores were 15, 16, 14, 13. Construct a 90% confidence interval for
the average test scores for all students.

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SOLUTIONS
1. CHAPTER 9 - HYPOTHESIS TESTING (From the data: p=.54, “high”, n=45, , =.52, α=.05 )

H0: p=.54, H1: p<.54


TS=-0.269

CV=-1.64

Reject Ho

α=.05 P=.54
Formula 3, CV=z= -1.64, Reject Ho if the TS < -1.64, TS= -0.269

Do not reject H0. The data suggests that 54% of students have part-time jobs.)

2. CHAPTER 6 – NORMAL DISTRIBUTION (From the data: μ=20, σ=2, x=21.67 Diagram required)
x=21.67

µ=20

=0.835, Area=.2967, p=.5+.2967=.796

3. CHAPTER 9 - HYPOTHESIS TESTING (From the data: µ=21, “true”, n=12, =23, s=2.44, α=.02 )
H0: u=21, H1: u≠21

CV=-2.718 CV=+2.718

TS=2.839
Reject Ho Reject Ho

α=.01 µ=21 α=.01

Formula 2, CV=t=+2.718, Reject Ho if the TS < -2.718 or TS > +2.718, TS=2.839

Reject H0. The data suggests that the average number of counselling hours is not 21 hours.)

4. CHAPTER 8 – CONFIDENCE INTERVALS (From the data: s=2, n=7, =60, confidence=99%)

Formula 2, t=3.707, 60 + 2.802 = 57.198, 62.802.

I am 99% confident that the population average height lies between 57.198 and 62.802 inches.

5. CHAPTER 9 - HYPOTHESIS TESTING (From the data: µ=1.23, “low”, n=45, =1.24, σ=0.03, α=.05)
H0: u=1.23, H1: u>1.23
CV=1.64

TS=2.236
Reject Ho

µ=1.23 α=.05

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Formula 1, , CV=z=1.64, Reject Ho if TS > 1.64, TS=2.236

Reject H0. The data suggests that the average price of gas is greater than $1.23)

6. CHAPTER 8 – CONFIDENCE INTERVALS (From the data: n=97, , =.50, confidence=90%)

Formula 3, z=1.64, .5 + .083 = .417, .583 = 41.7%, 58.3%

I am 90% confident that the population percentage of students receiving OSAP lies between 41.7% and 58.3%.

7. CHAPTER 8 – CONFIDENCE INTERVALS (From the data: σ=3.50, n=22, N=500, =78.23, confidence=98%)

Formula 1, , z=2.33, 78.23 + 1.701 = 76.529, 79.931

I am 98% confident that the population average amount lies between $76.529 and $79.931.

8. CHAPTER 8 – CONFIDENCE INTERVALS (From the data: n=4, confidence=90%)

Formula 2,

=14.500, =1.290, t=2.353,

= 14.500 + 1.517 = 12.983, 16.017

I am 90% confident that the population average test score lies between 12.983 and 16.017.

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