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Q2.
a) Explain the approaches to define probability.
Solution. Let E1, E2, E3 be the events that a bolt selected at random is manufactured by the
machines A, B, C respectively and let E denote the event of its being defective. Now P(E1) = 0.25,
P(E2) = 0.35, P(E3) = 0.40
The probability of drawing a defective bolt manufactured by machine A is P(E/E1) = 0.05.
Similarly we have
P(E/E2) = 0.04, P(E/E3) = 0.02
Hence the probability that a defective bolt selected at random is manufactured by machine A is given
by
Similarly we get
P(E2/E) =28/69, P(E3/E) =16/69
Q3.
a) The procedure of testing hypothesis requires a researcher to adopt several steps.
Describe in brief all such steps.
b) A sample of 400 items is taken from a normal population whose mean as well as
variance is 4. If the sample mean is 4.5, can the sample be regarded as a truly random
Sample?
[a) Hypothesis testing procedure b) Calculation and solution to the problem] 5, 5
Answer.
a.
Steps for procedure of testing hypothesis
5.
Drawing a Conclusion
P-value <= significance level (a) => Reject your null hypothesis in favor of your alternative
hypothesis. Your result is statistically significant.
2. P-value > significance level (a) => Fail to reject your null hypothesis. Your result is not
statistically significant.
Hypothesis testing is not set up so that you can absolutely prove a null hypothesis. Therefore, when
you do not find evidence against the null hypothesis, you fail to reject the null hypothesis. When you
do find strong enough evidence against the null hypothesis, you reject the null hypothesis. Your
conclusions also translate into a statement about your alternative hypothesis. When presenting the
results of a hypothesis test, include the descriptive statistics in your conclusions as well. Report exact
p-values rather than a certain range. For example, "The intubation rate differed significantly by
patient age with younger patients have a lower rate of successful intubation (p=0.02)." Here are two
more examples with the conclusion stated in several different ways.
Conclusion:
The difference in survival between the intervention and control group was statistically
significant.
There was a 20% increase in survival for the intervention group compared to control
(p=0.001).
b.
Step 1
H0:=4, H1:4
step 2
z=
4.54 4.54
=
=5
/ n
2
10
Answer:
a.
The Chi-square test is one of the most commonly used non-parametric tests in statistical work. The
Greek Letter 2 is used to denote this test. 2 describe the magnitude of discrepancy between the
observed and the expected frequencies. The value of 2 is calculated as:
Where, O1, O2, O3.On are the observed frequencies and E1, E2, E3En are the corresponding
expected or theoretical frequencies.
Practical applications of Chi-Square test
In inferential statistics, the Chi-Square test can also be applied for the discrete distributions. The
applications of Chi-Square test include testing:
the independence in a contingency table whether the observed results are consistent with the
expected segregations in breeding experiments of genetics
Where the first is a parametric test and the other two are nonparametric test.
Uses of Chi-Square test
The 2 test is used broadly to:
Test goodness of fit for one way classification or for one variable only
Test independence or interaction for more than one row or column in the form of a
5. 2 test is wholly dependent on degrees of freedom. As the degrees of freedom increase, the ChiSquare distribution curve becomes symmetrical.
6. The expected frequency of any item or cell must not be less than 5, the frequencies of adjacent items
or cells should be polled together in order to make it more than 5.
7. The data should be expressed in original units for convenience of comparison and the given
distribution should not be replaced by relative frequencies or proportions.
8. This test is used only for drawing inferences through test of the hypothesis, so it cannot be used for
estimation of parameter value.
b.
Components of Time Series
i) Long term trend or secular trend
ii) Seasonal variations
iii) Cyclic variations
iv) Random variations
Q5. What do you mean by cost of living index? Discuss the methods of construction of
cost of living index with an example for each. (Meaning of cost of living index, Methods
of constructing cost of living index with an example for each) 2, 8
Answer: Cost of Living Index or Consumer Price Index
The Cost of living index, also known as consumer price index or Cost of living price index is the
countrys principal measure of price change. The Consumer price index helps us in determining the
effect of rise and fall in prices on different classes of consumers living in different areas.
Methods of Constructing Consumer Price Index
There are two methods for constructing consumer price index number. They are:
I. Aggregate expenditure method
8
10
7
14
11
7
5
10
9
9
12
9
13
12
14
A = 50
B = 40
C = 60
150 2
=
= 1500
15
2
N
(A )2
SSC =
( B )2
( C)2
( D )2
+
+
n1
+,,,,,,+
+
n2
n3
= 502 + 40 2 + 60 2
5
( N )2
n4
1500 = 1540 1500 40
nn
T2
Sum of the squares of the Error within columns (samples): SSE = SST SSC =
100 40 = 60
Variance between samples:
SSC
MSC =
k 1
40
= 3 1
40
= 2 = 20
60
MSE = (n k) = (15 3)
=5