ANSWERSCRIPT

1. a) Circle TRUE or FALSE, and give reason for your answer in the space provided.
i) TRUE/FALSE. Reason (needed for credit):
This is a controlled study where we get to see the exact effect of fee.
ii) TRUE/FALSE. Reason (needed for credit):
Samples may have different sample SD. As the sample SD will be used to compute the margin of error, (population SD being unknown),
confidence intervals may be of different length.
iii) TRUE/FALSE. Reason (needed for credit):
V(Tn) goes to 0, so Tn has to go to , the expected value as n increases. Hence T n is consistent for .
iv) TRUE/FALSE. Reason (needed for credit):
Variance should be 4v.
v) TRUE/FALSE. Reason (needed for credit):
For a both sided alternative hypothesis extreme values will be taken in both sides, higher and lower. So p-value will be higher. (In fact it
would be 2x0.06 = 0.12.)
2. a) Probability: 0.5.
Reason: P(X180) = NORM.DIST(180, 200*0.9,5,TRUE) = 0.5.
b) Value of x: 192.
Reason: We need to find x such that the no. of passengers showing up, say Y, is not more than 180 with probability at least 0.9. So P(Y
180) = 0.9.
Clearly, Y~N(0.9x,5) as per given information. So,

~N(0,1), and hence P(Z

) = 0.9. So

=1.28 given the hint.

Solving, we get x=192.889. So we should book 192 passengers. (Choosing 193 will reduce the probability below 0.9.)
3. a) Whats wrong: The rejection mechanism used by the dealer is valid for a both sided test only, i.e. he has tested H 0: =100 against
H1: 100. The described test cannot be done this way.
b) Give detailed computation and then conclude:
Clearly, given small sample size and unknown population variance, we reject H 0:=100 at a 5% level of significance against H1: <100 if

<-t15,0.05, or if the p-value corresponding to the value of

is less than 5%. So we need to somehow obtain sample mean

and

sample SD S.
Now, the confidence interval is of the form

ME. So here

is the middle point of the interval (94.5,99.5) and hence is 97.

ME is therefore 2.5. Now, as we do not know population variation, here we have to use t. In other words, ME = t15,0.025

As ME = 2.5, t15,0.025 = T.INV(0.975,15) = 2.13, hence S = 2.5 x 4/2.13 = 4.69.

Given the form of our test, the p-value is P(t15 <

) = T.DIST(

, 15,TRUE) =0.01. As it is less than 5%, we reject the null.

c) 99% Confidence interval: (93.54,100.46).

Reason: Here ME is t15,0.005

= 2.95x4.69/4 = 3.46. So the confidence interval is 97 3.46 = (93.54,100.46).

d) Sample size needed: 147.

Reason: Assuming population SD is known and equal to 4.69. So now ME = z 0.005

,where

n is the minimum required sample size.

As length of confidence interval is to be 2, ME = 1. We equate 1=2.58x4.69/ . Solving, we get n = 146.41, so we choose the next
highest integer, 147.
4. Computation of level:
Level = P(rejecting H0 when it is true) = P(no defective phone among chosen two when M=5)
= P(0 out of 5 defectives and 2 out of 5 non-defectives are chosen)
5

C0 5 C2 10
0.22.
10
C2
45

5.a) Average age:

23332 4 4 2 4
3 years
9

b) Sampling distribution of the sample mean:

Groups chosen

Gr.1 and Gr. 2 or

Gr. 1 and Gr. 4

Gr. 2 and Gr. 3 or

Gr. 3 and Gr. 4

2.75 years

Gr. 1 and Gr. 3

or Gr. 2 and Gr.
4
3 years

Value (of sample mean)

3.20 years

Total

Probability

1/3

1/3

1/3

Reason: Each pair of groups has a probability 1/6 of being chosen.

c) Unbiased? Write Yes or no: No.
Reason: The expected value of the sample mean for the above distribution is (2.75+3+3.2)/3 = 2.983 years.
Hence, as the expected value of the sample mean is not 3 years, the sample mean is biased for the average age of the kids in
the crche.