Newbold Sbe8 Tif Ch07

Statistics for Business and Economics, 8e (Newbold)
Chapter 7 Estimation: Single Population
1) In a recent survey of 600 adults, 16.4% indicated that they had fallen asleep in front of the television in
the past month. Which of the following intervals represents a 98% confidence interval for the population
proportion?
A) 0.137 to 0.192
B) 0.140 to 0.189
C) 0.129 to 0.199
D) 0.143 to 0.186
Answer: C
Difficulty: Moderate
Topic: Confidence Interval Estimation for Population Proportion (Large Samples)
AACSB: Analytic Skills
Course LO: Discuss the applications of confidence interval estimation
THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION:

Consider the following point estimators, W, X, Y, and Z of μ: W = (x1 + x2)/2;
X = (2x1 + x2)/3; Y = (x1 + 3x2)/4; and Z = (2x1 + 3x2)/5.
2) Which of the following point estimators is the most efficient?

A) W
B) X
C) Y
D) Z
Answer: A
Topic: Properties of Point Estimators
3) What is the relative efficiency of W with respect to X?

A) 0.9
B) 1.6
C) 1.1
D) 0.4
Answer: C
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Copyright © 2013 Pearson Education, Inc.
4) What is the relative efficiency of Z with respect to Y?
A) 0.50
B) 0.80
C) 1.20
D) 1.50
Answer: C
5) The amount of material used in making a custom sail for a sailboat is normally distributed with a
standard deviation of 64 square feet. For a random sample of 15 sails, the mean amount of material used
is 912 square feet. Which of the following represents a 99% confidence interval for the population mean
amount of material used in a custom sail?
A) 912 ± 49.2
B) 912 ± 42.6
C) 912 ± 44.3
D) 912 ± 46.8
Answer: B
Topic: Confidence Interval Estimation for the Mean of a Normal Distribution: Population Variance
Known
6) The number of television sets produced from an assembly line each day is known to have a standard
deviation of 17.4 sets per day. The production line averaged 452.3 sets per day for 20 randomly selected
days. Which of the following represents a 95% confidence interval for the population mean number of
sets per hour?
A) 452.3 ± 9.4
B) 452.3 + 11.3
C) 452.3 ± 13.8
D) 452.3 ± 7.63
Answer: D
Known
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7) Which of the following statements is true regarding the width of a confidence interval for a population
proportion?
A) It is narrower for 95% confidence than for 90% confidence.
B) It is wider for a sample of size 80 than for a sample of size 40.
C) It is wider for 95% confidence than for 99% confidence.
D) It is narrower when the sample proportion is 0.20 than when the sample proportion is 0.50.
Answer: D
Difficulty: Easy
8) Let X1, X2, X3, and X4 be a random sample of observations from a population with mean μ and
variance σ2. Consider the following estimator of μ: 1 = 0.15 X1 + 0.35 X2 + 0.20 X3 + 0.30 X4. What is the
variance of 1?
A) 0.20 σ2
B) 0.275 σ2
C) 0.55 σ2
D) 0.125 σ2
Answer: B
Difficulty: Easy
9) In a survey of 472 personnel directors, 63% thought that they would be hiring new personnel over the
next three months. Which of the following represents a 98% confidence interval for the proportion of all
personnel directors planning to hire personnel over the next three months?
A) 0.63 ± 0.057
B) 0.63 ± 0.047
C) 0.63 ± 0.042
D) 0.63 ± 0.052
Answer: D
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10) The manager of the local health club is interested in determining the number of times members use
the weight room per month. She takes a random sample of 15 members and finds that over the course of a
month, the average number of visits was 11.2 with a standard deviation of 3.2. Assuming that the
monthly number of visits is normally distributed, which of the following represents a 95% confidence
interval for the average monthly usage of all health club members?
A) 11.2 ± 1.74
B) 11.2 ± 1.77
C) 11.2 ± 1.62
D) 11.2 ± 1.83
Answer: C
11) For a population that is normally distributed with a very large population size compared to the
sample size, the variance of the sample mean is given by:
A) σ /
B) σ2 /
C) σ / n
D) σ2 / n
Answer: D
Difficulty: Easy

The number of beverage cans produced each hour from a vending machine is normally distributed with a
standard deviation of 8.6. For a random sample of 12 hours, the average number of beverage cans
produced was 326.0. Assume a 99% confidence interval for the population mean number of beverage cans
produced per hour.
12) Calculate the margin of error of the 99% confidence interval.

A) 1.85
B) 3.60
C) 6.41
D) 10.56
Answer: C
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13) Calculate the width of the 99% confidence interval estimate.
A) 12.81
B) 3.21
C) 6.41
D) 7.20
Answer: A
Known
14) Find the upper confidence limit of the 99% confidence interval.
A) 340.25
B) 325.98
C) 319.59
D) 332.41
Answer: D
Known
15) Find the lower confidence limit of the 99% confidence interval.
A) 340.25
B) 325.98
C) 319.59
D) 332.41
Answer: C
Known
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16) The dollar value of orders placed through a particular store catalog is found to be normally
distributed with a standard deviation of $21.58. A sample of 30 orders averaged $81.25. What is the 90%
confidence interval around this sample mean?
A) $81.25 ± $21.58
B) $81.25 ± $10.79
C) $81.25 ± $12.15
D) $81.25 ± $6.48
Answer: D
Known

Suppose that the waiting times for patients at a local hospital are normally distributed with known
population standard deviation of 30 minutes. A random sample of 75 patients in the local hospital had a
mean time of 90 minutes. Assume a 95% confidence interval for the population mean μ.
17) What is the formula used to calculate the standard error?

A) σ /
B) σ2 /
C) σ / n
D) σ / n2
Answer: A
Difficulty: Easy
Known
18) Calculate the standard error of the 95% confidence interval.

A) 0.40
B) 3.46
C) 13.69
D) 2.50
Answer: B
Known
7-6
19) Calculate the margin of error of the 95% confidence interval.
A) 5.69
B) 8.93
C) 6.79
D) 8.06
Answer: C
Known
20) Calculate the width of the 95% confidence interval estimate.

A) 16.12
B) 11.38
C) 17.86
D) 13.58
Answer: D
Known
A) 95.68
B) 98.07
C) 96.79
D) 94.43
Answer: C
Known
A) 83.21
B) 85.57
C) 81.93
D) 84.32
Answer: A
Known
7-7
A school bus driver records the time (in minutes) it takes to commute to school for six days. Those results
are: 25, 22, 17, 20, 15, and 10. Assuming the population is normally distributed, develop a 90% confidence
interval for the population mean.
23) What is the value of the sample mean?

A) 22.6
B) 20.4
C) 16.8
D) 18.2
Answer: D
Unknown
24) What is the value of the sample standard deviation?

A) 4.88
B) 4.25
C) 5.34
D) 3.64
Answer: C
Known
25) Determine the reliability factor from the Student's t distribution table.
A) 1.476
B) 2.015
C) 3.365
D) 4.032
Answer: B
Unknown
7-8
A) 13.81
B) 18.24
C) 21.59
D) 25.89
Answer: C
Unknown
A) 13.81
B) 18.24
C) 22.59
D) 25.89
Answer: A
Unknown
28) In developing an interval estimate for a population mean, the population standard deviation σ is
assumed to be 8. The interval estimate is 45.82 ± 2.36. What will be the interval estimate for the
population mean if σ is equal to 16?
A) 45.82 ± 4.72
B) 45.82 ± 2.36
C) 45.82 ± 9.44
D) 45.82 ± 5.56
Answer: A
Known
7-9
29) In developing an interval estimate for a population mean, a sample of 40 observations was used. The
interval estimate was 28.76 ± 1.48. Had the sample size been 160 instead of 40, the interval estimate would
have been:
A) 28.76 ± 0.37
B) 28.76 ± 0.74
C) 28.76 ± 1.48
D) 28.76 ± 2.96
Answer: B
Known
30) A 95% confidence interval estimate for a population mean μ is determined to be 65.48 to 76.52. Which
of the following is true if a 90% confidence interval for μ is constructed?
A) It is wider than the 95% confidence interval.
B) It is the same as the 95% confidence interval.
C) It is narrower than the 95% confidence interval.
D) There is not enough information to determine the answer.
Answer: C
Known
31) Interval estimates for the variance of a normal population rely on the random variable (n - 1)s2 / σ2,
which follows:
A) a normal distribution.
B) a binomial distribution.
C) the Poisson distribution.
D) a chi-square distribution.
Answer: D
Unknown
7-10
32) If a sample of size 200 has 40 successes, the lower limit of a confidence interval at the 95% level of
confidence for the population proportion is:
A) 0.2554
B) 0.1446
C) 0.2465
D) 0.1535
Answer: B
33) The 95% confidence interval for the population proportion P, given a sample size n = 2200 and sample
proportion = 0.214 is computed as:
A) 0.214 ± 0.017
B) 0.214 ± 0.048
C) 0.214 ± 0.069
D) 0.214 ± 0.086
Answer: A
34) The lower limit of a 95% confidence interval for the population proportion P given a sample size n =
100 and sample proportion = 0.62 is equal to:
A) 0.715
B) 0.699
C) 0.525
D) 0.440
Answer: C
35) The upper limit of 90% confidence interval for the population proportion P, given a sample size n =
300 and sample proportion = 0.1833 is equal to:
A) 0.1466
B) 0.1395
C) 0.2271
D) 0.2200
Answer: D
7-11
36) Which of the following distributions is used when estimating the population mean from a normal
population with unknown variance?
A) the t distribution with n + 1 degrees of freedom
B) the t distribution with n degrees of freedom
C) the t distribution with n - 1 degrees of freedom
D) the t distribution with 2n degrees of freedom
Answer: C
Difficulty: Easy
Unknown
37) The 95% confidence interval for the population proportion P given a sample size n = 300 and sample
proportion = 0.2933 is calculated as:
A) 0.2933 ± 0.0515
B) 0.2933 ± 0.0289
C) 0.2933 ± 0.9200
D) 0.2933 ± 0.8145
Answer: A
38) Which of the following statements is true?

A) If a sample has 16 observations and a 90% confidence estimate for μ is needed, the appropriate t-score
is 1.753.
B) If a sample has 16 observations and a 99% confidence estimate for μ is needed, the appropriate t-score
is 2.602.
C) If a sample has 20 observations and a 95% confidence estimate for μ is needed, the appropriate t-score
is 1.729.
D) If a sample has 20 observations and a 98% confidence estimate for μ is needed, the appropriate t-score
is 2.093.
Answer: A
Unknown
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39) If a sample has 20 observations and a 90% confidence estimate for μ is needed, the appropriate t-score
is:
A) 2.120
B) 1.746
C) 2.131
D) 1.729
Answer: D
Unknown
40) If a sample of size 30 is selected, the value of A for the probability P(t ≥ A) = 0.01 is:
A) 2.247
B) 2.045
C) 2.462
D) 2.750
Answer: C
Unknown
41) If a sample of size 21 is selected, the value of A for the probability P(t ≥ A) = 0.025 is:
A) 2.528
B) 2.086
C) 2.518
D) 2.080
Answer: B
Unknown
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42) The following sample was taken from a normally distributed population: 20, 27, 15, 20, 16, 22, and 13.
A 95% confidence interval for the population mean using this sample is:
A) 19 ± 5.603
B) 19 ± 2.201
C) 19 ± 8.804
D) 19 ± 4.402
Answer: D
Unknown
43) If a sample of size 61 is selected, the value of A for the probability P(-A ≤ t ≤ A) = 0.95 is:
A) 2.000
B) 2.021
C) 1.677
D) 1.671
Answer: A
Unknown
A) 1.303
B) 1.684
C) 2.021
D) 2.423
Answer: B
Unknown
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45) In order to estimate the average daily down time, a manufacturer randomly sampled 41 days of
production records and found a mean of 51.75 minutes and standard deviation of 7.9 minutes. A 90%
confidence interval for the population mean is:
A) 51.75 ± 4.76
B) 51.75 ± 3.28
C) 51.75 ± 2.08
D) 51.75 ± 1.30
Answer: C
Unknown
A) 1.960
B) 2.576
C) 1.282
D) 2.326
Answer: D
Unknown
47) A sample of 50 students is taken from Utah Valley University (UVU). These students spent an average
of $175 on books this semester, with a standard deviation of $25. A 95% confidence interval for the
average amount of money spent on books for all students at UVU is equal to ________. (Hint: Use Excel
function to obtain the critical value.)
A) 175 ± 3.47
B) 175 ± 7.18
C) 175 ± 7.51
D) 175 ± 3.86
Answer: B
Unknown
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48) A random sample of size 15 is taken from a normally distributed population with a sample mean of
75 and a sample variance of 25. The upper limit of a 95% confidence interval for the population mean is
equal to:
A) 77.530
B) 72.231
C) 74.727
D) 79.273
Answer: A
Unknown
49) Consider the following random sample from a normal population: 14, 10, 13, 16, 12, 18, 15, and 11.
What is the 95% confidence interval for the population variance?
A) 11.39 to 15.86
B) 3.11 to 29.51
C) 6.54 to 38.82
D) 1.12 to 5.69
Answer: B
Unknown

Let X1, X2, X3, and X4 be a random sample of observations from a population with mean μ and variance
σ2. Consider the following two point estimators of μ:
1 = 0.10 X1 + 0.40 X2 + 0.40 X3 + 0.10 X4 and

2 = 0.20 X1 + 0.30 X2 + 0.30 X3 + 0.20 X4
50) Which of the following statements is true?

A) 1 is biased, but 2 is an unbiased estimator of μ.
B) 1 is unbiased, but 2 is a biased estimator of μ.
C) Both 1 and 2 are unbiased estimators of μ.
D) Both 1 and 2 are biased estimators of μ.
Answer: C
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51) Which of the following constraints is true?
A) Var( 1) = Var( 2)
B) Var( 1) > Var( 2)
C) Var( 1) < Var( 2)
D) = 0.76
Answer: B
52) What is the relative efficiency of 1 with respect to 2?

A) 1.05
B) 0.98
C) 1.30
D) 0.76
Answer: D
53) The point estimator is said to be an unbiased estimator of θ if Var( ) = Var(θ).

Answer: FALSE
Difficulty: Easy
54) The bias of an estimator is equal to E( ) - θ.

Answer: TRUE
Difficulty: Easy
55) If the population is normally distributed, both the sample mean and the median are unbiased
estimators of the population mean.
Answer: TRUE
Difficulty: Easy
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56) If Var ( 1) = σ2 and Var ( 2) = 2σ2, then the relative efficiency of 1 with respect to 2 is equal to 0.5.
Answer: FALSE
Difficulty: Easy
57) All other things being equal, the larger the sample size, the narrower the interval estimates that reflect
the uncertainty about a parameter's true value.
Answer: TRUE
Difficulty: Easy
Known
58) A sample statistic such that the mean of all its possible values equals the population parameter the
statistic seeks to estimate is an unbiased estimator.
Answer: TRUE
Difficulty: Easy
59) The lower limit of the 90% confidence interval for the population proportion P, given that n = 400; and
= 0.10 is 0.1247.
Answer: FALSE
60) When computing the confidence interval for the population proportion, the Student's t-distribution is
used rather than the normal distribution.
Answer: FALSE
Difficulty: Easy
61) The quantity 100 (1 + α)% is called the confidence level of the interval.
Answer: FALSE
Difficulty: Easy
Known
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62) The width of a confidence interval is equal to twice the margin of error.
Answer: TRUE
Difficulty: Easy
Known
63) For a 90% confidence interval, the reliability factor is equal to 1.96.
Answer: FALSE
Difficulty: Easy
Known
64) If the shopping times for a random sample of 25 shoppers in a supermarket are normally distributed
with a known population standard deviation of 15 minutes, the standard error is equal to 0.6.
Answer: FALSE
Known
65) Keeping all other factors constant, the more the population standard deviation is reduced, the smaller
the margin of error.
Answer: TRUE
Difficulty: Easy
Known
66) The margin of error can be reduced by decreasing the sample size.
Answer: FALSE
Difficulty: Easy
Known
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67) Like the standard normal distribution, all t - distributions have a mean of zero and a standard
deviation of 1.
Answer: FALSE
Difficulty: Easy
Unknown
68) The larger the sampling error, the smaller the sample size needed to develop the confidence interval.
Answer: TRUE
Difficulty: Easy
Known
69) The Student's t distribution is the ratio of the standard normal distribution to the square root of the
chi-square distribution divided by its degrees of freedom.
Answer: TRUE
Difficulty: Easy
Known
70) The probability density functions of normal distributions and t distributions are symmetric about
their means.
Answer: TRUE
Difficulty: Easy
71) As the confidence level for a confidence interval increases, the width of the interval also increases.
Answer: TRUE
Difficulty: Easy
Topic: Sample-Size Determination: Large Populations
72) An unbiased estimator of a population parameter is an estimator whose variance is the same as the
actual value of the population variance.
Answer: FALSE
Difficulty: Easy
7-20
73) The process of inferring the values of unknown population parameters from those of known sample
statistics is called estimation.
Answer: TRUE
Difficulty: Easy
74) The density function of the standard normal distribution has a wider dispersion than the Student's t
distribution.
Answer: FALSE
Difficulty: Easy
Unknown
75) Confidence intervals for the population proportion are centered on the sample proportion.
Answer: TRUE
Difficulty: Easy
76) A point estimate is an estimate of a population parameter expressed as a single numerical value.
Answer: TRUE
Difficulty: Easy
77) The t-distribution with n -1 degrees of freedom is often used to construct confidence intervals of the
population mean when the population standard deviation is known.
Answer: FALSE
Difficulty: Easy
Unknown
78) The sample standard deviation s is an unbiased estimator of the population standard deviation σ.
Answer: TRUE
Difficulty: Easy
7-21
79) An estimator is unbiased if the mean of its sampling distribution is the population parameter being
estimated.
Answer: TRUE
Difficulty: Easy
80) An interval estimate is an interval that provides an upper and lower bound for a specific population
parameter whose value is unknown.
Answer: TRUE
Difficulty: Easy
Unknown
81) An unbiased estimation procedure for the population total Nμ yields the point estimate N .
Answer: TRUE
Difficulty: Easy
82) The sample proportion is a biased estimator of the population proportion P.

Answer: FALSE
Difficulty: Easy
83) Whatever the value of the sample proportion, (1 - ) cannot be smaller than 0.25.
Answer: FALSE
Difficulty: Easy
Topic: Confidence Interval Estimation: Finite Populations
84) The maximum distance between an estimator and the true value of a parameter is called the margin of
error.
Answer: TRUE
Difficulty: Easy
7-22
85) The value of the standard error of the mean is determined by dividing the total error by the sample
size.
Answer: FALSE
Difficulty: Easy
86) The bias of an unbiased estimator is equal to 1.

Answer: FALSE
Difficulty: Easy
87) If the campaign manager of a US senator is interested in estimating the proportion of registered voters
who will support the senator during the next election, the sample proportion would be the appropriate
point estimate.
Answer: TRUE
88) A point estimator 1 is said to be more efficient than a point estimator 2 if Var( 1) > Var( 2).
Answer: FALSE
Difficulty: Easy
89) The normal distribution is used to develop a confidence interval estimate of the population
proportion if the sample size is large.
Answer: TRUE
Difficulty: Easy
90) The concept of margin of error is not applicable when estimating the population proportion P.
Answer: FALSE
Difficulty: Easy
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91) A 95% confidence interval estimate for a population mean μ is determined to be 62.8 to 73.4. If the
confidence level is reduced to 90%, the confidence interval for μ becomes narrower.
Answer: TRUE
92) A narrower confidence interval for a population parameter with a given confidence level can be
obtained by increasing the sample size.
Answer: TRUE
Difficulty: Easy
93) A 95% confidence interval for the population proportion will not extend approximately 1.96 on
each side of the sample proportion.
Answer: FALSE
Topic: Sample-Size Determination: Finite Populations
94) The number of bolts produced each hour from a particular machine is normally distributed with a
standard deviation of 7.4. For a random sample of 15 hours, the average number of bolts produced was
587.3. Find the upper and lower confidence limits of a 98% confidence interval for the population mean
number of bolts produced per hour.
Answer: σ = 7.4, = 587.3, n = 15
± zα/2 ∙ σ / = 587.3 ± 2.33 (7.4 / ) = 587.2 ± 4.45 .Hence, UCL = 591.75 and LCL = 582.85
Known
95) In a recent survey of 600 adults, 16.4% indicated that they had fallen asleep in front of the television in
the past month. Develop a 95% confidence interval for the population proportion.
Answer:
± zα/2 = 0.164 ± 1.96(0.0151) = 0.164 ± 0.0296. Hence, UCL = 0.1936 and LCL = 0.1344
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96) In a recent survey of 574 employees, 15.5% indicated that they were not in favor of a particular plan.
What is the level of confidence associated with the interval of 12.85% to 19.89%?
Answer: zα/2 = (0.1989 - 0.1285)/2 = 0.0352 ⇒ zα/2 = 0.0151
⇒ zα/2 = 0.0352 / 0.0151 = 2.33. Hence α / 2 = 0.01, or α = 0.02. Then the confidence level is 98%.
97) A student records the time (in minutes) it takes to commute to school for seven days. Those results
are: 21, 15, 13, 16, 10, 13, and 18. Assuming the population is normally distributed, develop a 95%
confidence interval for the population mean.
Answer: = 15.143, s = 3.625, tn-1, α/2 = t6, 0.025 = 2.447
± tn-1, α/2 s/ = 15.143 ± 2.447(3.625/ ) = 15.143 + 3.353. Hence, UCL=18.496 and LCL=11.79
Unknown
98) You are told that a 95% confidence interval for the population mean is 17.3 to 24.5. If the population
standard deviation is 18.2, how large was the sample?
Answer: Width = 2zα/2 = 24.5 - 17.3 = 7.2. Then, 2(1.96),
2(1.96) = 7.2 ⇒ = 7.2 ⇒ = 9.909 ⇒ n = 98.19 ≈ 99
Known
99) The amount of material used in making a custom sail for a sailboat is normally distributed. For a
random sample of 15 sails, you find that the mean amount of material is 912 square feet, with a standard
deviation of 64 square feet. Develop a 99% confidence interval for the population mean amount of
material used in a custom sail.
Answer: ± tn-1, α/2 s/ = 912 ± (2.977)(16.52) = 912 ± 49.2 or 862.8 < μ < 961.2
Unknown
7-25
100) You are interested in determining the amount of time (in minutes) you spend each day on the
Internet. For seven days, these values are: 51, 24, 16, 88, 63, 28, and 59. Assume that the amount of time
you spend on the Internet each day is normally distributed, and develop a 90% confidence interval for the
population average amount of time.
Answer: n = 7, = 47, s = 25.65, t6, 0.05 = 1.943
± tn-1, α/2 ∙ s/ = 47 ± 1.943(25.65 / ) = 47 ± 18.84, or 28.16 < μ < 65.84
Unknown
101) A mother who is interested in the true proportion of R-rated movies shown on pay TV by a cable
system randomly selects 98 listings and finds 14 of them are R-rated movies. In her report to the
subcommittee she wants to be 98% confident that the true proportion will be in an interval which she
states. She has asked you to assist her by preparing a 98% confidence interval based on the data she
collected. What should she report?
Answer: ± z.01 = .1429 ± 2.33 = .1429 ± (2.33 × .0353) or 0.0605 < P < 0.2253

A Monte Carlo study involves 10,000 random samples of size 20 from a normal population with mean μ =
120 and standard deviation σ = 20. For each sample, the mean and the median are calculated, with the
following results:
Estimator Mean Median

Average 120.2 119.96
Variance 25.52 67.89
102) What does the study suggest about the bias of the estimators in this situation?
Answer: The two estimators—the mean and the median—appear to be unbiased. The averages are all
very close to 120. This result should hold because the simulation uses a symmetric (normal) population.
Difficulty: Easy
7-26
103) Which of the two estimators appears most efficient?
Answer: The mean has the smallest variance, and therefore will have the smallest standard error. The
sample mean appears most efficient. This result follows a normal population. It may not hold for other
populations.
Difficulty: Easy

Let X1, X2, X3, and X4 be a random sample of observations from a population with mean μ and variance
σ2. Consider the following two point estimators of μ:

1 = 0.10 X1 + 0.20 X2 + 0.40 X3 + 0.30 X4, and
2 = 0.25 X1 + 0.25 X2 + 0.30 X3 + 0.20 X4
104) Show that both the estimators are unbiased.

Answer: E( 1) = 0.10 E(X1) + 0.20 E(X2) + 0.40 E(X3) + 0.30 E(X4)
= 0.10 μ + 0.20 μ + 0.40 μ + 0.30 μ = μ
E( 2) = 0.25 E(X1) + 0.25 E(X2) + 0.30 E(X3) + 0.20 E(X4)
= 0.25 μ + 0.25 μ + 0.30 μ + 0.20 μ = μ
Since E( 1) = E( 2) = μ, 1 and 2 are both unbiased estimators of μ.
105) Which estimator is more efficient, ( 1) or ( 2)? Explain in detail.

Answer: Var( 1) = Var(0.10 X1) + Var(0.20 X2) + Var(0.40 X3) + Var(0.30 X4)
= 0.01 σ2 + 0.04 σ2 + 0.16 σ2 + 0.09 σ2
= 0.30 σ2
Var( 2) = Var(0.25 X1) + Var(0.25 X2) + Var(0.30 X3) + Var(0.20 X4)
= 0.0625 σ2 + 0.0625 σ2 + 0.09 σ2 + 0.04 σ2
= 0.255σ2
Since Var( 2) < Var( 1), then 2 is more efficient than 1.
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106) Find the relative efficiency of 2 with respect to 1.
Answer: Relative efficiency = Var( 1)/Var( 2)= 0.30/0.255 = 1.176
107) Raising in-state and out-of-state tuition is supposed to reduce the number of students in state
supported universities. The registrar of a university wants to estimate the proportion P of students who
are paying for out-of-state tuition on the installment plan (to later be compared with in-state installment
plan payers). A random sample of 80 students who live out-of-state is taken and 50 of them pay tuition on
the installment plan. Find a 99-percent confidence interval for P, based on these data.
Answer: ± z.005 = .625 ± 2.58 = .625 ± .1396, or 0.4854 < P < 0.7646

The Daytona Beach Tourism Commission is interested in the average amount of money a typical college
student spends per day during spring break. They survey 35 students and find that the mean spending is
$63.57 with a standard deviation of $17.32.
108) Develop a 95% confidence interval for the population mean daily spending.
Answer: ± tn-1, α/2 s/ = 63.57 ± 2.042(17.32) / 5.9 = 63.57 ± = 63.57 ± 5.978
Then, UCL = 69.548 and LCL = 57.592.
Unknown
109) Interpret the 95% confidence level for the population mean daily spending.
Answer: If independent random samples of size 35 are repeatedly selected from the population and 95%
confidence intervals for each of these samples are determined, then over a very large number of repeated
trials, 955 of these intervals will contain the value of the true average amount of money a typical college
student spends per day during spring break.
Unknown
7-28
110) What level of confidence is associated with an interval of $58.62 to $68.52 for the population mean
daily spending?
Answer: tn-1, α/2 s/ = (68.52 - 58.62) / 2 = 4.95 ⇒ t34, α/2 = 4.95 ⇒ t34, α/2 = 1.69.
Hence, α/2 = 0.05, or α = 0.10. Then the confidence level is 90%.

Unknown

A researcher is interested in determining the percentage of all households in the U.S. that have more than
one home computer. In a survey of 492 households, 27% indicated that they own more than one home
computer.
111) Develop a 90% confidence interval for the proportion of all households in the U.S. with more than
one computer.
Answer: n = 492, 0.27, zα/2 = z0.05 = 1.645
± zα/2 = 0.27 ± 1.645 = 0.27 ± 0.033. Hence, UCL = 0.303 and LCL = 0.237
112) The researcher reports a confidence interval of 0.2312 to 0.3096 but neglects to tell you the confidence
level. What is the confidence level associated with this interval?
Answer: Width = 2zα/2 = 0.3096 - 0.2312 = 0.0784
Then, 2zα/2 = 0.0784
0.04zα/2 = 0.0784 ⇒ zα/2 = 1.96. Hence, α/2 = 0.025, or α = 0.05. Then, the confidence level is 95%.
7-29
A computer is programmed to draw 1000 samples, each of size 40 from a normally distributed population
having mean 50 and standard deviation 10. For each sample, the mean and the median are computed.
The average value and standard deviation of each set of estimates for the 1000 samples are as follows.
Statistic Average Value Standard Deviation

Mean 50.1278 2.2132
Median 50.2109 2.8263
113) Do the two statistics appear to be unbiased?

Answer: The average value of each estimator is very close to the population mean 50, so both estimators
appear to be unbiased.
Unknown
114) Which statistic appears to be more efficient?

Answer: The sample mean has the smallest standard error, so it appears to be most efficient in this
situation.
Unknown

Suppose that the amount of time teenagers spend on the internet is normally distributed with a standard
deviation of 1.5 hours. A sample of 100 teenagers is selected at random, and the sample mean is
computed as 6.5 hours.
115) Determine the 95% confidence interval estimate of the population mean.
Answer: ± zα/2 σ/ = 6.5 ± (1.96)(1.5 / ) = 6.5 ± 0.294 ⇒ 6.206 < μ < 6.794
Known
7-30
116) Interpret what the 95% confidence interval estimate of the population mean tells you.
Answer: If we repeatedly draw independent random samples of size 100 from the population of
teenagers and confidence intervals for each of these samples are determined, then over a very large
number of repeated trials, 95% of these confidence intervals will contain the value of the true population
mean amount of time teenagers spend on the internet.
Known

The data shown below specify how much a sample of 20 executives paid in federal income taxes, as a
percentage of gross income, are reproduced below.
18.0 20.1 20.6 22.2 23.7 24.4 24.4 25.1 25.2 25.5
26.1 26.3 26.7 27.2 27.9 28.3 29.9 30.0 32.4 35.7
Assume that the standard deviation for the underlying population is equal to 4.0.
117) Calculate a 95% confidence interval for the population mean.

Answer: The data above for a random sample of n = 20 yielded = 25.985 and we shall assume that σ = 4.
Since α = .05 implies zα/2 = z.025 = 1.96, the 95% confidence interval for μ is ± zα/2 ∙ σ / = 25.985 ±
(1.96)(4) / = 25.985 ± 1.753, or 24.232 < μ < 27.738
Known
118) Calculate a 99% confidence interval for the population mean.

Answer: Since zα/2 = z.005 = 2.58, then ± zα/2 σ/ = 25.985 ± (2.575)(4) / = 25.985 ± 2.308, or 23.681
< μ < 28.289.
Unknown
7-31
119) Give a careful verbal interpretation of the 99% confidence interval for the population mean.
Answer: We would expect that 99% of all confidence intervals calculated in this manner would include
the true value of the parameter μ. This means that if we sampled again and again (20 persons each time)
and calculated a sample mean and a 99% confidence interval for the true mean each time, we would
expect that 99% of them would include the population mean μ.
Unknown
120) Closed caption movies allow the hearing impaired to enjoy the dialogue as well as the acting. A local
organization for the hearing impaired people of the community takes a random sample of 100 movie
listings offered by the cable television company in order to estimate the proportion of closed caption
movies offered. They observed that 14 movies were closed caption. The cable television company says at
least 5% of the movies shown are closed captioned. Prepare a 90% confidence interval for the true
proportion P and comment on the cable television company's claim.
Answer: ± z.05 = .14 ± 1.645 = .14 ± .057, or 0.083 ≤ P ≤ 0.197

The organization for hearing impaired people can be 90% confident that the proportion of closed caption
movies offered is somewhere between 0.083 (8.3%) and 0.197 (19.7%). The cable television company could
therefore conclude that at least 5% of the movies it shows are closed captioned.

The sales manager for a hardware wholesaler finds that 229 of the previous 500 calls to hardware store
owners resulted in new product placements. Assume that the 500 calls represent a random sample.
121) Find a 95% confidence interval for the long-run proportion of new product placements.
Answer: The sample proportion of calls that resulted in new product placement is = 229 /500 = .458. α
= .05 implies zα/2 = z.025 = 1.96. A 95% confidence interval for P is ± z.025 = .458 ± 1.96
= 0.458 ± 0.044, or 0.414 < P < 0.502.
7-32
122) Give a careful verbal interpretation of the 95% confidence interval for the long-run proportion of
new product placements.
Answer: We are 95% confident that the true long run proportion of new product placements is in the
interval (0.414, 0.502). By 95% confident we mean that if this experiment is conducted several times and a
confidence interval is calculated for each trial, we expect 95% of them to include the true long run
proportion.
123) Find the confidence interval for estimating the population proportion for 90% confidence level;
sample size n = 675; and sample proportion = 0.10.
Answer: ± zα/2 = 0.10 ± 1.645
= 0.10 ± 0.019, or 0.081 < P < 0.119

A furniture mover calculates the actual weight as a proportion of estimated weight for a sample of 31
recent jobs. The sample mean is 1.13 and the sample standard deviation is 0.16.
124) Calculate a 95% confidence interval for the population mean using t tables.
Answer: Given: n = 31, = 1.13, and s = 0.16. To calculate a 95% confidence interval, we need the t table
value for v = 30. With α = .05 this value is t.025, 30 = 2.042. The confidence interval is ± tα/2 ∙ s / = 1.13
± (2.042)(0.16 / ) = 1.13 ± .059 or 1.071 < μ < 1.189
Unknown
125) Assume that the population standard deviation is known to be 0.16. Calculate a 95% confidence
interval for the population mean using the z table.
Answer: If σ is known to be 0.16, we may use the z table value z.025 = 1.96 (rather than the t table value)
in the 95% confidence interval.
± zα/2 σ / = 1.13 ± (1.96)(0.16 / ) = 1.13 ± .056 or 1.074 < μ < 1.186
Known
7-33
126) Are the 95% confidence intervals for the population mean, using t tables and using the z table
assuming that the population standard deviation is known to be 0.16, of roughly similar size? Explain.
Answer: The two intervals are almost the same. The artificial (and probably incorrect) assumption that σ
is equal to s allows us to quote a slightly narrower interval.
Unknown

A regional CPA firm conducted an audit for a discount chain. One part of the audit involved developing
an estimate for the mean dollar error in total charges that occur during the checkout process. They wish
to develop a 90% confidence interval estimate for the population mean. A simple random sample of n =
20 is selected, with the following data (in dollars):
0.00 1.20 0.43 1.00 1.47 0.83 0.50 3.34 1.58 1.46
-0.36 -1.10 2.60 0.00 0.00 -1.70 0.83 1.99 0.00 1.34
127) Calculate the sample mean.

Answer: = = $15.41/20 = $0.77
Unknown
128) Calculate the sample standard deviation.

Answer: s = = = $1.19
Unknown
129) Develop a 90% confidence interval estimate for the population mean.
Answer: ± tα/2 ∙ s / = 0.77 ± (1.729)(1.19 / ) = 0.77 ± 0.46, or $0.31 < μ < $1.23
Unknown
7-34
130) In a recent survey of personnel directors, 71% thought that they should hire new personnel over the
next three months. The researcher conducting the survey reported that the 99% confidence interval for the
proportion of all personnel directors planning to hire personnel over the next three months was from 0.68
to 0.74. What is the sample size taken by the researcher?
Answer: Width = 2Zα/2 = 0.74 - 0.68 = 0.06
Then, 2(2.58) = 0.06
⇒ 5.16 = 0.06 ⇒ n = (5.16)2 (0.2059) / (0.06)2 = 1522.84 ≈ 1523
131) The number of television sets coming off a production line each day is known to have a standard
deviation of 118.5 sets per day. The production manager tells you that the 90% confidence interval for the
population mean was 552.3 to 621.9. How large a sample was this confidence interval based on?
Answer: Width = 2Zα/2 = 621.9 - 552.3 = 69.6
Then, 2(1.645) = 69.6 ⇒ = 69.6 ⇒ = 5.6 ⇒ n = 31.37 ≈ 32
Known
132) The number of television sets coming off a production line each day is known to have a standard
deviation of 17.4 sets per day. The production line averaged 852.3 sets per day for 20 randomly selected
days. What is the level of confidence associated with the interval 844.75 to 860.0?
Answer: Width = 2Zα/2 = 860 - 844.75 - 15.25. Then,
2Zα/2 (17.4 / ) = 15.25 ⇒ 7.7815 Zα/2 = 15.25. Hence, Zα/2 = 1.96 and α/2 = 0.025.
Known
7-35
133) There is concern about the speed of automobiles traveling over US 131. For a random sample of
seven automobiles radar indicated the following speeds, in miles per hour: 80, 74, 69, 78, 87, 72, and 70.
Assuming a normal population distribution, find the margin of error of a 95% confidence interval for the
mean speed of all automobiles traveling over this stretch of highway.
Answer: n = 7, = 75.7143, s = 6.3957, t6,0.025 = 2.447
Margin of error: ME = ± tn-1, α/2 ∙ s / = ± 2.447(6.3957) / ) = ± 5.9152
Unknown

A random sample of ten homes in a particular suburb had the following selling prices (in thousands of
dollars): 92, 83, 110, 115, 108, 96, 102, 90, 100, and 98.
134) Check for evidence of nonnormality.
Answer:
There is no evidence of nonnormality.

135) Find a point estimate of the population mean that is unbiased and efficient.
Answer: The minimum variance unbiased point estimator of the population mean is the sample mean,
where the value of the sample mean is = = 994 / 10 = 99.4
7-36
136) Use an unbiased estimation procedure to find a point estimate of the variance of the sample mean.
Answer: The unbiased point estimate of the variance of the sample mean:
= /(n - 1) = 862.4 / 9 = 95.822
Since Var( ) and / n, then Var ( ) = / n = 95.822 /10 = 9.582
137) Use an unbiased estimator to estimate the proportion of homes in this suburb selling for less than
$95,000.
Answer: The sample proportion is an unbiased estimator of the population proportion P.
Then, = 3/10 = 0.30

Suppose that x1 and x2 are random samples of observations from a population with mean μ and variance
σ2. Consider the following three point estimators, X, Y, and Z, of μ: X = (x1 + x2)/2, Y = (x1 + 3x2)/4, and Z
= (x1 + 2x2)/3.
138) Show that all three estimators X, Y, and Z are unbiased.

Answer: E(X) = [E(X1) + E(X2)]/2 = (μ + μ)/2 = μ
E(Y) = [E(X1) + 3E(X2)]/4 = (μ + 3μ)/4 = μ
E(Z) = [E(X1) + 2E(X2)]/3 = (μ + 2μ)/3 = μ
Since E(X) = E(Y) = E(Z) = μ, all three estimators are unbiased.
Difficulty: Challenging
139) Which of the estimators X, Y, and Z is the most efficient?

Answer: Var(X) = [Var(X1) + Var(X2)]/4 = (σ2 + σ2)/4 = σ2 /2
Var(Y) = [Var(X1) + 9Var(X2)]/16 = (σ2 + 9σ2)/16 = 5σ2 /8
Var(Z) = [Var(X1) + 4Var(X2)]/9 = (σ2 + 4σ2)/9 = 5σ2 /9
Hence, X is the most efficient estimator since Var(X) < Var (Z) < Var(Y).
Note that X = (X1 + X2)/2 = , then Var(X) = Var( ) = σ2 /n = σ2 /2.
Difficulty: Challenging
7-37
7-38
140) Find the relative efficiency of X with respect to each of the other two estimators Y and Z.
Answer: Relative efficiency of X with respect to Y = Var(Y) / Var(X)
= (5σ2 /8) / (σ2 /2) = 5/4 = 1.25
Relative efficiency of X with respect to Z = Var(Z) / Var(X)
= (5σ2 /9) / (σ2 /2) = 10/9 = 1.11

A process producing bricks is known to produce bricks whose weights are normally distributed with a
standard deviation of 0.11 lb. A random sample of 16 bricks from today's output had a mean weight of
4.08 lb.
141) Find a 99% confidence interval for the mean weight of all bricks produced this day.
Answer: n = 16, = 4.08, σ = .11, z.005 = 2.576
± zα/2∙ σ / = 4.08 ± (2.58)(0.11/4) = 4.08 ± 0.0708, or 4.0091 < μ < 4.1509
Known
142) Without doing the calculations, explain whether a 95% confidence interval for the mean weight of all
bricks produced this day would be wider than, narrower than, or the same width as that of a 99%
confidence interval.
Answer: A 95% confidence interval for the population mean would be narrower than that of a 99%
confidence interval since the z score for a 95% confidence interval (1.96) is smaller than the z score for the
99% confidence interval (2.576).
Difficulty: Easy
Known
7-39
143) It is decided that tomorrow a sample of 20 bricks will be taken. Without doing the calculations,
explain whether a correctly calculated 95% confidence interval for the mean weight of tomorrow's output
would be wider than, narrower than, or the same width as that of a 99% confidence interval for the mean
weight of all bricks produced this day.
Answer: A correctly calculated 95% confidence interval for the population mean would be narrower than
that of a 99% confidence interval for the mean weight of all bricks produced this day due to the smaller
standard error.
Known
144) Suppose that the population standard deviation for today's output is 0.14 lb (not 0.11 lb). Without
doing the calculations, explain whether a correctly calculated 99% confidence interval for the mean
weight of today's output would be wider than, narrower than, or the same width as that of a 99%
confidence interval calculated using the population standard deviation of 0.11 lb for today's output.
Answer: A correctly calculated 99% confidence interval for the population mean would be wider than
that of a 99% confidence interval calculated using the population standard deviation of 0.11 lb for today's
output due to the larger standard error.
Known

From a random sample of 500 registered voters in Los Angeles, 400 indicated that they would vote in
favor of a proposed policy in an upcoming election.
145) Calculate a 98% confidence interval estimate for the population proportion in favor of this policy.
Answer: = 400 / 500 = 0.80, n = 500, zα/2 = z0.01 = 2.33
± zα/2 = 0.80 ± 2.33
= 0.80 ± 0.0417, or 0.7583 < P < 0.8417
7-40
146) Calculate the width of the 90% confidence interval estimate for the population proportion in favor of
this policy.
Answer: In this case, zα/2 = z0.05 = 1.645
Margin of error ME = zα/2 = 1.645 = 0.0294
Width of the 90% confidence interval estimate = 2 ∙ ME = (2)(0.0294) = 0.0589

A clinic offers a weight-reduction program. A review of its records revealed the following weight losses,
in pounds, for a random sample of 10 of its clients at the conclusion of the program: 20, 15, 21, 28, 22, 19,
9, 14, 18, and 23.
147) Find a point estimate of the population mean and population standard deviation of the weight
losses.
Answer: = = 18.9 and s = = = 5.301
Unknown
148) Find a 95% confidence interval for the population mean.

Answer: n = 10, = 18.9, s = 5.03, t 9, 0.025 = 2.262
± tα/2 s / = 18.9 ± (2.262)(5.301 / ) = 18.9 ± 3.79, or 15.11 < μ < 22.69
Unknown
149) Without doing any calculations, explain whether a 90% confidence interval for the population mean
would be wider than, narrower than, or the same as that of a 95% confidence interval for the population
mean.
Answer: A 90% confidence interval for the population mean would be narrower than that of a 95%
confidence interval for the population mean since the t-score for a 90% confidence interval with v = 9
(1.833) is smaller than the t-score for the 95% confidence interval in the previous question (2.262).
Unknown
7-41
150) To calculate a required sample size to estimate a population proportion, given a desired confidence
interval and margin of error, the sample proportion is required but often unknown before the sample is
collected. How is this predicament resolved?
Answer: Without any additional information, the most conservative approach is to assume that the
sample proportion equals 0.50. Using this value, you are assured that the confidence interval and margin
of error requirements are met, since this will provide the largest possible sample size. This is
because (1 - ) cannot be larger than 0.25, which is its value when the sample proportion is 0.50.
151) How large the sample is needed to estimate the population proportion if ME = 0.09, a = 0.05?
Answer: ME = 0.09, a = 0.05, zα/2 = 1.96
n= = = 118.57 ≈ 119
7-42

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Statistics for Business and Economics, 8e (Newbold)

Chapter 7 Estimation: Single Population

THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION:

2) Which of the following point estimators is the most efficient?

3) What is the relative efficiency of W with respect to X?

THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION:

12) Calculate the margin of error of the 99% confidence interval.

THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION:

17) What is the formula used to calculate the standard error?

18) Calculate the standard error of the 95% confidence interval.

20) Calculate the width of the 95% confidence interval estimate.

23) What is the value of the sample mean?

24) What is the value of the sample standard deviation?

38) Which of the following statements is true?

THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION:

σ2. Consider the following two point estimators of μ:

1 = 0.10 X1 + 0.40 X2 + 0.40 X3 + 0.10 X4 and

50) Which of the following statements is true?

52) What is the relative efficiency of 1 with respect to 2?

53) The point estimator is said to be an unbiased estimator of θ if Var( ) = Var(θ).

54) The bias of an estimator is equal to E( ) - θ.

82) The sample proportion is a biased estimator of the population proportion P.

86) The bias of an unbiased estimator is equal to 1.

2(1.96) = 7.2 ⇒ = 7.2 ⇒ = 9.909 ⇒ n = 98.19 ≈ 99

THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION:

Estimator Mean Median

THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION:

σ2. Consider the following two point estimators of μ:

104) Show that both the estimators are unbiased.

105) Which estimator is more efficient, ( 1) or ( 2)? Explain in detail.

THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION:

Hence, α/2 = 0.05, or α = 0.10. Then the confidence level is 90%.

THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION:

Statistic Average Value Standard Deviation

113) Do the two statistics appear to be unbiased?

114) Which statistic appears to be more efficient?

THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION:

THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION:

117) Calculate a 95% confidence interval for the population mean.

118) Calculate a 99% confidence interval for the population mean.

Answer: ± z.05 = .14 ± 1.645 = .14 ± .057, or 0.083 ≤ P ≤ 0.197

THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION:

THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION:

THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION:

127) Calculate the sample mean.

128) Calculate the sample standard deviation.

Answer: Width = 2Zα/2 = 621.9 - 552.3 = 69.6

Then, 2(1.645) = 69.6 ⇒ = 69.6 ⇒ = 5.6 ⇒ n = 31.37 ≈ 32

Answer: Width = 2Zα/2 = 860 - 844.75 - 15.25. Then,

THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION:

There is no evidence of nonnormality.

= /(n - 1) = 862.4 / 9 = 95.822

Since Var( ) and / n, then Var ( ) = / n = 95.822 /10 = 9.582

THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION:

138) Show that all three estimators X, Y, and Z are unbiased.

139) Which of the estimators X, Y, and Z is the most efficient?

THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION:

THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION:

THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION:

148) Find a 95% confidence interval for the population mean.

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