Individual One- and Two-Sample Tests of Hypothesis, Variance, and Chisquared Analysis Problem Sets

Resource: Statistical Techniques in Business & Economics Prepare responses to the following exercises from the text: Exercises 31, 32, and 38 (Ch. 10) Exercises 27, 46, and 52 (Ch. 11) Exercises 23 and 28 (Ch. 12) Exercises 19 and 20 (Ch. 17)

Exercises 31, 32, and 38 (Ch. 10) 31. A new weight-watching company, Weight Reducers International, advertises that those who join will lose, on the average, 10 pounds the first two weeks with a standard deviation of 2.8 pounds. A random sample of 50 people who joined the new weight reduction program revealed the mean loss to be 9 pounds. At the .05 level of significance, can we conclude that those joining Weight Reducers on average will lose less than 10 pounds? Determine the p-value. Hint: Use the Megastat Hypothesis Test function for a Mean versus Hypothesized value. Use the Summary Input option. The output contains the p-value. Note you must place the following four values in four contiguous cells in your spreadsheet (in this order) Label, mean, standard deviation, N. To enter them into Megastat just block off the four cells as the address to enter in the input field. Hypothesis Test: Mean vs. Hypothesized Value
10.00 9.00 2.80 0.40 50 hypothesized value mean weight std. dev. std. error n

-2.53 .0116 8.22 9.78 0.78

z p-value (two-tailed) confidence interval 95.% lower confidence interval 95.% upper margin of error

OK let us see if I understand this. Because .0116 is > the .05 we are looking for 9 does not equal 10 so the answer to the question Can we conclude that those joining will lose less than 10 pounds? Is yes. Also 10 does not fall within the confidence intervals so again 10 does not equal the 9 in our sample.

32. Dole Pineapple, Inc., is concerned that the 16-ounce can of sliced pineapple is being overfilled. Assume the standard deviation of the process is .03 ounces. The quality control

department took a random sample of 50 cans and found that the arithmetic mean weight was 16.05 ounces. At the 5 percent level of significance, can we conclude that the mean weight is greater than 16 ounces? Determine the p-value. Hint: Same procedure as #31. Hypothesis Test: Mean vs. Hypothesized Value
16.0000 16.0500 0.0300 0.0042 50 hypothesized value mean weight std. dev. std. error n

11.79 0.00E+00 16.0417 16.0583 0.0083

z p-value (two-tailed) confidence interval 95.% lower confidence interval 95.% upper margin of error

Yes the mean weight is greater than 16 ounces. 38. A recent article in The Wall Street Journal reported that the 30-year mortgage rate is now less than 6 percent. A sample of eight small banks in the Midwest revealed the following 30-year rates (in percent): 4.8 5.3 6.5 4.8 6.1 5.8 6.2 5.6 At the .01 significance level, can we conclude that the 30-year mortgage rate for small banks is less than 6 percent? Estimate the p-value. Hint: Go to the same Megastat function window as for #31 and #32 BUT select the data option instead of the Summary option. Then just enter the info. Hypothesis Test: Mean vs. Hypothesized Value
6.0000 5.6375 0.6346 0.2244 8 hypothesized value mean Data std. dev. std. error n

-1.62 .1061

z p-value (two-tailed)

5.0596 6.2154 0.5779

confidence interval 99.% lower confidence interval 99.% upper margin of error

No we can not conclude that the interest rate for small banks is less than 6%.

Exercises 27, 46, and 52 (Ch. 11) 27. A recent study focused on the number of times men and women who live alone buy take-out dinner in a month. The information is summarized below. Statistic Sample mean Population standard deviation Sample size Men 24.51 4.48 35 Women 22.69 3.86 40

At the .01 significance level, is there a difference in the mean number of times men and women order take-out dinners in a month? What is the p-value? Hint: Now use Megastats Two Sample Hypothesis Testing function. Use the Summary Input option. Select the t test option, NOT the z. Select the Not Equal test, the Pooled Variance option, and the Test Unequal Variance Option. Running the test with the Pooled versus the Unequal Variance options results in p-values which differ only by 3/1000ths. Hypothesis Test: Independent Groups (t-test, pooled variance)
Men 24.51 4.48 35 Women 22.69 3.86 40 73 1.82000 17.30792 4.16028 0.96292 0 1.890 .0627 -0.72679 4.36679 2.54679 F-test for equality of variance mean std. dev. n df difference (Men - Women) pooled variance pooled std. dev. standard error of difference hypothesized difference t p-value (two-tailed) confidence interval 99.% lower confidence interval 99.% upper margin of error

20.0704 14.8996 1.35 .3678

variance: Men variance: Women F p-value

Ok once again checking understanding, the p value is almost 37 % so that means that there is a 37% chance of samples being the same, additionally the pooled is between the upper and lower limits of the confidence interval. Therefore men and women eat out the same amount. 46. Grand Strand Family Medical Center is specifically set up to treat minor medical emergencies for visitors to the Myrtle Beach area. There are two facilities, one in the Little River Area and the other in Murrells Inlet. The Quality Assurance Department wishes to compare the mean waiting time for patients at the two locations. Samples of the waiting times, reported in minutes, follow: Location Waiting Time Little River 31.73 28.77 29.53 22.08 29.47 18.60 32.94 25.18 29.82 26.49 Murrells Inlet 22.93 23.92 26.92 27.20 26.44 25.62 30.61 29.44 23.09 23.10 26.69 22.31 Assume the population standard deviations are not the same. At the .05 significance level, is there a difference in the mean waiting time? Hint: Go to the same Megastat screen as in #27, BUT use the data option, everything else is the same. 52. The president of the American Insurance Institute wants to compare the yearly costs of auto insurance offered by two leading companies. He selects a sample of 15 families, some with only a single insured driver, others with several teenage drivers, and pays each family a stipend to contact the two companies and ask for a price quote. To make the data comparable, certain features, such as the deductible amount and limits of liability, are standardized. The sample information is reported below. At the .10 significance level, can we conclude that there is a difference in the amounts quoted?

Family Becker Berry Cobb Debuck DuBrul Eckroate German Glasson King Kucic

Progressive Car Insurance $2,090 1,683 1,402 1,830 930 697 1,741 1,129 1,018 1,881

GEICO Mutual Insurance $1,610 1,247 2,327 1,367 1,461 1,789 1,621 1,914 1,956 1,772

Meredith Obeid Price Phillips Tresize

1,571 874 1,579 1,577 860

1,375 1,527 1,767 1,636 1,188

Hint: Use the Paired Observations option in the Hypothesis Test section of Megastat. Use the Data option and the standard options. Exercises 23 and 28 (Ch. 12) 23. A real estate agent in the coastal area of Georgia wants to compare the variation in the selling price of homes on the oceanfront with those one to three blocks from the ocean. A sample of 21 oceanfront homes sold within the last year revealed the standard deviation of the selling prices was $45,600. A sample of 18 homes, also sold within the last year, that were one to three blocks from the ocean revealed that the standard deviation was $21,330. At the .01 significance level, can we conclude that there is more variation in the selling prices of the oceanfront homes? Hint: This question is asking you to calculate an F statistic. It is simply the ratio of the variances (the squared standard deviations). Use the degrees of freedom (20 and 17 respectively, the sample sizes minus one) to look up the critical F value and compare it to your calculated F statistic. 28. The following is a partial ANOVA table. Sum of Source Squares df Treatment 2 Error Total 500 11

Mean Square 20

Complete the table and answer the following questions. Use the .05 significance level. a. How many treatments are there? b. What is the total sample size? c. What is the critical value of F? d. Write out the null and alternate hypotheses. e. What is your conclusion regarding the null hypothesis? Hint: the formulas you need to calculate the missing values are given in the table labeled ANOVA Table in Chapter 12. If you open the chapter and then do a text search for ANOVA Table it will take you there. Just use logic and algebra to solve for the missing values using the formulas listed in the table. Exercises 19 and 20 (Ch. 17)

19. In a particular market there are three commercial television stations, each with its own evening news program from 6:00 to 6:30 P.M. According to a report in this morning's local newspaper, a random sample of 150 viewers last night revealed 53 watched the news on WNAE (channel 5), 64 watched on WRRN (channel 11), and 33 on WSPD (channel 13). At the .05 significance level, is there a difference in the proportion of viewers watching the three channels? Station WNAE WRRN WSPD # of Viewers 53 64 33

Hint: Use the Chi Square function in Megastat. The initial setup is as follows:
Ho: There is no preference with respect to TV stations. H1: There is a preference with respect to TV stations. df = 3 1 = 2 Ho is rejected if 2 is greater than 5.991 The Chi Square table is given by: TV Station fo fe fo fe (fo fe)2 (fo fe)2/fe WNAE 53 50 WRRN 64 50 WSPD 33 50 Total 150 150 Sum the last column and compare that value to the 2 Critical value above (5.991). If the calculated value is larger you reject Ho, meaning there is a preference.

20. There are four entrances to the Government Center Building in downtown Philadelphia. The building maintenance supervisor would like to know if the entrances are equally utilized. To investigate, 400 people were observed entering the building. The number using each entrance is reported below. At the .01 significance level, is there a difference in the use of the four entrances? Entrance Main Street Broad Street Cherry Street Walnut Street Total Frequency 140 120 90 50 400

Hint: Same as above.