Assignment 2 Cover Sheet

STUDENT NAME: Gerryl Floyd Anaque STUDENT NUMBER: S261503

POSTAL ADDRESS: 6/35 Lee point rd. Moil
POSTCODE: 0810 PHONE: 0414531580
EMAIL: gerrylfloyd@gmail.com
UNIT NAME: Problem Solving
UNIT CODE: BCO105
Semester __2____
Year _____2014_____
LECTURER NAME : Albie Kenny
ASSESSMENT TITLE: Assignment 3
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BCO105 S261503 Assessment Item 3

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BCO105 S261503 Assessment Item 3

1
Question 1

a)

Independent variables are variable that stands alone and is not changed by the other
variables that are measured. In this case, the independent variable is the size of the
apartment, as the weekly rental cost will be based on this variable (Nces.ed.gov 2014).

Independent variables are something that depends on other factors. In this case, the
weekly rental cost is the independent variable because it could change depending on the
size of the apartment in the city (Nces.ed.gov 2014).

b)
Equation of the best-fitting line: = b0 + b1x, Predicted value:

Preliminary calculations needed to find b1 and b0:

x y y x xy
79 219 47961 6241 17301
135 369 136161 18225 49815
101 277 76729 10201 27977
114 346 119716 12996 39444
67 219 47961 4489 14673
138 392 153664 19044 54096
106 381 145161 11236 40386
67 216 46656 4489 14472
65 202 40804 4225 13130
89 265 70225 7921 23585
102 323 104329 10404 32946
119 381 145161 14161 45339
184 531 281961 33856 97704
127 415 172225 16129 52705
109 323 104329 11881 35207
114 335 112225 12996 38190
116 254 64516 13456 29464
117 392 153664 13689 45864
107 277 76729 11449 29639
83 265 70225 6889 21995
126 369 136161 15876 46494
97 381 145161 9409 36957
70 277 76729 4900 19390
93 185 34225 8649 17205
111 404 163216 12321 44844

x=2636 y=7998 y=2725894 x=295132 xy=888822
BCO105 S261503 Assessment Item 3

2
The equation is determined by:
b0: y-intercept
b1: slope

SS(x) x
2

x
( )
2
n
295132
2636
2
25

17192.16

SS(xy) xy
x y
n
888822
(2636)(7998)
25

45512.88

b1 = SS(xy) = 45512.88 = 2.6473
SS(x) 17192.16

b0 = y (b1 x) = 7998 (2.6473) (2636) = 40.7887
n 25

= 40.7887 + 2.6473x

c)
Size of the apartment versus weekly rental cost
Weekly rental cost ($) = 40.7887 + 2.6473 Size (square metres)

W
e
e
k
l
y

r
e
n
t
a
l

c
o
s
t

(
$
)


Size (square metres)
BCO105 S261503 Assessment Item 3

3

c) (continued)

The equation shows that the coefficient
for the Size in square metres is $2.65.
The estimate indicates that for every
additional 1 square metre in the size of
the apartment in the city, it can be
expected that the weekly rental cost to
increase by an average of $2.65.
Moreover, the model predicts that the
weekly rental cost for 0 square metre
apartments will be $40.79 (Frost 2013).

Comments: The interpretation of the
intercept do not make sense because
there is no apartment that has a size of 0
sq metre. The apartment would have to
be considerably larger than 0 sq metre.
Although the intercept is not a reasonable
data point, this is a correct interpretation
of the coefficient in the model
(Interpreting the slope and the intercept
in a linear regression model, n.d.).

d)

= 40.7887 + 2.6473x
= 40.7887 + 2.6473 (100) =
305.5187


The calculated value, $305.52, is
the predicted weekly rental cost
for an apartment that has an area
of 100 square metres.

e)

No. It would be inappropriate to use the
model to predict the weekly rental for an
apartment that has an area of 50 square
metres. The collected apartment sizes
are in the city and only range from 60
square metres to 180 square metres.

f)
= 40.7887 + 2.6473x
= 40.7887 + 2.6473 (100) =
305.5187
= 40.7887 + 2.6473 (120) =
358.4647

Apartment #1 (100 sqm)
$305.5187-$294= $11.52

Apartment #2 (120 sqm)
$358.4647-$329= $29.46

I would recommend the 120 sqm
apartment as it would be more
spacious and they can save more
on the weekly rental.
BCO105 S261503 Assessment Item 3

4
Question 2

a)

The coefficient of linear correlation, r.

r
n xy x y
[n( x
2
) ( x)
2
][n( y
2
) ( y)
2
]

25(8888) (2636)(7998)
[25(295132) (2636)
2
][25(2725894) (7998)
2
]

1137822
1340261.03
0.84895552



The calculated value, 0.849, shows that there is relatively strong positive
linear association between the size of the apartment and weekly rental cost.

b)

The standard error of regression (slope) is

b
1
and is estimated by
s
e
2

y
2
( )
b
0
( )
y
( )
b
1
( )
xy
( )
n 2

(2725894) (40.7887)(7998) (2.6473)(888822)

23

46687.4964
23
2029.8911


s
b
1
2

s
e
2
SS(x)

2029.8911
17192.16
0.11807

s
b
1
= s
b
1
2
= 0.11807 = 0.3436
1
b
s
BCO105 S261503 Assessment Item 3

5
c)

Significance test for correlation

Hypothesis:
H
0
: b1 = 0 (no correlation)
H
A
: b1 0 (correlation exists)

Test statistic:

t = ___r___ = ___0.84895552___ = 7.704
1-r 1-0.84895552
n-2 25-2



Decision: Reject Ho
Conclusion: Sine tThere is sufficient evidence to show that correlation exist at the 5%
level of significance.

d)

Results obtained in parts (a) and (c) are the same. Both results agree that
there is evidence that the slope of the line of best fit is different from zero. The
evidence indicates there is a linear relationship and that the size of
apartments in square metres is useful in predicting the weekly rental cost in
the city.







BCO105 S261503 Assessment Item 3

6
Question 3

Table 1


x f xf xf
16 2 32 512
17 4 68 1156
18 1 18 324
19 1 19 361
22 1 22 484
28 2 56 1568
31 2 62 1922
39 1 39 1521
48 1 48 2304
50 1 50 2500
51 1 51 2601
56 2 112 6272
60 1 60 3600
63 1 63 3969
64 1 64 4096
69 1 69 4761
73 1 73 5329
90 1 90 8100
91 1 91 8281
92 1 92 8464

f=27 xf=1179 xf =68125


x

= xf/f = 1179 / 27 = 43.67

s = [xf - ((xf) /f)/ f-1] = [68125 ((1179) / 27)/27-1] = 640.08

s = s = 640.08 = 25.30

BCO105 S261503 Assessment Item 3

7

a)

1) a) The population parameter of
concern is the mean, ,
processing time taken to
process policy approval.

b) Ho: = 45, Ha: 45

2) a) The sampled population is
approximately normal

b) Test statistic: t* with df = n-1
= 27 1 = 26

c) Level of significance: a = 0.05

3) The sample evidence
a) Sample information:
n= 27, x

= 43.67, and s = 25.30

b) t* = x

- = 43.67 45 = -0.273
s/n 25.30/27

4) The probability distribution
a) The critical value: t(26, 0.05) =
1.70

b) t* is not in the critical region

5) The result
a) Decision: Fail to reject Ho

b) Conclusion: there is insufficient
evidence to show the average
processing time taken to approve
policies is different from 45 days.



b)

Since is unknown, an alternative
method is used called t-statistic. t is
distributed symmetrically about its
mean. Thus, it is assumed that the
population distribution is
approximately normal.
BCO105 S261503 Assessment Item 3

8
c)

5 number summary

The minimum: L = 16

Q1 (the 1
st
quartile and P25):

d(Q1) = (25/100) (27) = 6.75
Since 6.75 is a fraction, the next larger interger, 7, is used.

Q1 is the 7
th
value, counting from L, Q1 = 18

The median (P50 and 2
nd
quartile) :

d(Q2) = (50/100) (27) = 13.5
Since 13.5 is a fraction, the next larger interger, 14, is used.

Q2 is the 14
th
value, counting from L, Q2 = 39


Q3 (the 3
rd
quartile and P75):

d(Q3) = (75/100) (27) = 20.25
Since 20.25 is a fraction, the next larger interger, 21, is used.

Q3 is the 21
st
value, counting from L, Q3 = 63


The maximum: H = 92





BCO105 S261503 Assessment Item 3

9




Boxplots can act as a graphical display test to see if data are normally
distributed. If a distribution is normal, the box containing the middle 50% if the
data should be pretty tightly grouped in the center of the distribution, with
longer whiskers indicating the increased spread of the upper and lowe quarter
of the data. In this case, the average policy processing time does appear to
be approximately normal (Learner.org 2014). Hence, assumption made in part
(b) has not been seriously violated.
BCO105 S261503 Assessment Item 3

10
Question 4

a) The classical approach


1) a) The population parameter of
interest is the mean, , bottle fill of 2
.0 litre bottles.

b) Ho:= 2.0 () (at least 2.0 litres),
Ha:<2.0 (less than 2.0 litres)

2) a) CLT applies. The sampling
distribution of the sample mean can
be expected to be normal.

b) test statistic : z* = x

-
/n
c) let = 0.05

3) a) A random sample of 100 2.0
litre bottles is examined

n= 100, and x

= 1.99

b) z* = x

- = 1.99-2.0 = -2.0
/n 0.05/100

4) a) determine the critical region(s)
and critical value(s).

critical value for ( = 0.05) is -1.65

b) The calculated values of z, z*= -
2.0 is within the critical region

5) The result
a)Decision: Reject Ho

b) There is sufficient evidence at the
0.05 level of significance to show that
the mean bottle fill is different from
2.0 litres.



b) The p-value approach

1) The population parameter of
interest is the mean, , bottle fill of 2
.0 litre bottles.

2) a) The bottle fill of 2.0 litre bottles is
probably mound shape. A sample size
of 100 should be sufficient for the CLT
to apply. The sampling distribution of
the sample mean can be expected to
be normal.

b) test statistic : z* = x

-
/n
c) let = 0.05

3) The sample evidence
a) A random sample of 100 2.0 litre
bottles is examined

n= 100, and x

= 1.99

b) Calculate the value of test statistic
(=0.05)

z* = x

- = 1.99-2.0 = -2.0
/n 0.05/100

4) The probability distribution
a) calculate the p-value for the test
statistic

p=p(z<z*)=p(z<-2.0)= p(z>2.0)
=1 0.9772 = 0.0228

5) The result
a) Decision about Ho: reject Ho

b) Because the p-value is so small
(p<0.05), there is sufficient evidence
at the 0.05 level of significance to
show that the mean bottle fill is
different from 2.0 litres .
BCO105 S261503 Assessment Item 3

11

c)

1) The mean, , amount of bottle fill of
2.0 litre bottles

2) a) The amounts are normally
distributed, the distribution of x

is
normal

b) Use the standard normal variable z
with = 0.05

c) The question asks for 95%
confidence = 1-a= 0.95

3) given: n= 100, x

= 1.99, = 0.05

4) a) the confidence coefficient is
found using table 4 : z(a/2) = 1.96

b)Find the maximum error of estimate
Use the maximum error part of the
formula for CI

E= z(a/2) /n = 1.96(0.05/100)=
0.0098

c) Find the lower and upper
confidence limits
Use the sample mean and the
maximum error:

x

- z(a/2) /n to x

+ z(a/2) /n

1.99 0.0098 to 1.99+ 0.0098

1.9802 to 1.9998

1.98 to 2.00

1.98 to 2.00 is a 95% confidence
interval for the true mean bottle fill, ,
of 2.0 litre bottles






d)

Answers in a and c are different.
Using the classical approach, it is
found that the bottle fill for the bottles
is different from 2.0. While the 95%
confidence interval of the population
mean amount of soft drink in the
bottles suggest that it can be claimed
that the bottle fill is at least 2.0 litres.

Although, the classical approach
gives a more clearer information,
confidence intervals provide
information about statistical
significance, as well as direction and
strength of claim. More on classical
approach, It can be judged whether
the amount of bottle fill is at least 2.0
litres or less than 2.0 litres. This
allows a rapid decision and produce
a close result.

In conclusion, results should not be
based sole on one approach. Make
use of different hypothesis testing
methods in order to reach better
decisions and judgments.
BCO105 S261503 Assessment Item 3

12
Question 5

a)

x

= -10.0%, and s= 8.0 %

z= x

-


P(z -18)

P(-18-(-10.0)) = -1
8.0

P(z -1)
P(z 0.1587)

b)

P(z < 1)

P(1-(-10.0)) = 1.375
8.0

1.38

P(z < 1.38)
P(z < 0.9162)

c)

P(z 10)

P(10-(-10.0) = 2.5
8.0

P(z 2.5)
P(z 0.9938)


d)

80% = 0.8000
z(0.8) = 0.85

0.85 = x (-10.0)
8.0

x-(-10.0)=6.8

x= 16.8 %
e)

90%= 0.9000

1 0.9 = 0.1

z(0.1) = -1.28

-1.28 = x (-10.0)
8.0

x = -0.24%
f)

According to Empirical rule,

2 covers about 95% of the value
data.

(-10.0)-2(8.0) = -26
(-10.0)+2(8.0) = 26

the two values are -26 and 26.



BCO105 S261503 Assessment Item 3

13
Reference list

Frost, J 2013, How to Interpret Regression Analysis Results: P-values and
Coefficients | Minitab, viewed 20 September 2013,
http://blog.minitab.com/blog/adventures-in-statistics/how-to-interpret-
regression-analysis-results-p-values-and-coefficients.

Interpreting the slope and the intercept in a linear regression model n.d.,
viewed 25 September 2014,
http://www.projectsharetexas.org/sites/default/files/resources/document
s/interpret_slope.pdf.

Learner.org 2014, Against All Odds: Inside Statistics: Home, viewed 30
September 2014,
http://www.learner.org/courses/againstallodds/pdfs/AgainstAllOdds_Fa
cultyGuide_Unit09.pdf.

Nces.ed.gov 2014, What are Independent and Dependent Variables?-NCES
Kids' Zone, viewed 5 October 2014,
http://nces.ed.gov/nceskids/help/user_guide/graph/variables.asp.