ECON 300 TEST 3 FALL 2010 NAME/PLEDGED______________________________________

I. MULTIPLE CHOICE: (2 points each) Carefully read each question and response before selecting the
one best answer. Clearly write the letter corresponding to your response on the Answer Sheet.

1. As the degrees of freedom increase, the t distribution approaches the

a. uniform distribution
b. normal distribution
c. exponential distribution
d. p distribution
2. The t distribution is a family of similar probability distributions, with each individual distribution depending on a
parameter known as the
a. finite correction factor
b. sample size
c. degrees of freedom
d. standard deviation
3. In determining an interval estimate of a population mean when  is unknown, we use a t distribution with
a. degrees of freedom
b. degrees of freedom
c. n  1 degrees of freedom
d. n degrees of freedom
4. The expression used to compute an interval estimate of  may depend on any of the following factors except
a. the sample size
b. whether the population standard deviation is known
c. whether the population has an approximately normal distribution
d. whether there is sampling error
5. As the sample size increases, the margin of error
a. increases b. decreases
c. stays the same d. None of the other answers is correct.
6. In general, higher confidence levels provide
a. wider confidence intervals
b. narrower confidence intervals
c. a smaller standard error
d. unbiased estimates
7. More evidence against H0 is indicated by
a. lower levels of significance
b. smaller p-values
c. smaller critical values
d. lower probabilities of a Type II error
8. Two approaches to drawing a conclusion in a hypothesis test are
a. p-value and critical value
b. one-tailed and two-tailed
c. Type I and Type II
d. null and alternative
9. As a general guideline, the research hypothesis should be stated as the
a. null hypothesis b. alternative hypothesis
c. tentative assumption d. hypothesis the researcher wants to disprove
10. A Type I error is committed when
a. a true alternative hypothesis is not accepted
b. a true null hypothesis is rejected
c. the critical value is greater than the value of the test statistic
d. sample data contradict the null hypothesis
11. Your investment executive claims that the average yearly rate of return on the stocks she recommends is at least
10.0%. You plan on taking a sample to test her claim. The correct set of hypotheses is
a. H0:   10.0% Ha:   10.0%
b. H0:   10.0% Ha:   10.0%
c. H0:   10.0% Ha:   10.0%
d. H0:   10.0% Ha:   10.0%
12. A soft drink filling machine, when in perfect adjustment, fills the bottles with 12 ounces of soft drink. Any
overfilling or underfilling results in the shutdown and readjustment of the machine. To determine whether or not
the machine is properly adjusted, the correct set of hypotheses is
a. H0:  < 12 Ha:   12 b. H0:   12 Ha:   12
c. H0:   12 Ha:   12 d. H0:   12 Ha:   12
13. If a hypothesis test leads to the rejection of the null hypothesis, a
a. Type II error must have been committed
b. Type II error may have been committed
c. Type I error must have been committed
d. Type I error may have been committed
14. The probability of making a Type I error is denoted by
a. 
b. 
c. 1  
d. 1  
15. The level of significance is the
a. maximum allowable probability of Type II error
b. maximum allowable probability of Type I error
c. same as the confidence coefficient
d. same as the p-value
16. If a hypothesis is rejected at a 5% level of significance, it
a. will always be rejected at the 1% level
b. will always be accepted at the 1% level
c. will never be tested at the 1% level
d. may be rejected or not rejected at the 1% level
17. Which of the following does not need to be known in order to compute the p-value?
a. knowledge of whether the test is one-tailed or two-tailed
b. the value of the test statistic
c. the level of significance
d. All of these are needed.
18. A p-value is the
a. probability, when the null hypothesis is true, of obtaining a sample result that is at least as
unlikely as what is observed
b. value of the test statistic
c. probability of a Type II error
d. probability corresponding to the critical value(s) in a hypothesis test
19. When developing an interval estimate for the difference between two sample means, with sample sizes of n1 and n2,
a. n1 must be equal to n2
b. n1 must be smaller than n2
c. n1 must be larger than n2
d. n1 and n2 can be of different sizes
20. An ANOVA procedure is used for data that was obtained from four sample groups each comprised of five
observations. The degrees of freedom for the critical value of F are
a. 3 and 20
b. 3 and 16
c. 4 and 17
d. 3 and 19
21. The test for goodness of fit
a. is always a one-tail test with the rejection region occurring in the upper tail
b. is always a one-tail test with the rejection region occurring in the lower tail
c. is always a two-tail test
d. can be a one-tail or two-tail test
22. Both the hypothesis test for proportions of a multinomial population and the test of independence focus on the
difference between
a. sample means and population means
b. observed frequencies and expected frequencies
c. two population proportions
d. two interval estimates
 II. PROBLEMS: This portion of the test is open-book, open-note. Point values are in italics. Write your final
answer on the answer sheet. Be sure to show how you determined your answer.

1. A random sample of 81 students at a local university showed that they work an average of 100 hours per month.
The population standard deviation is known to be 27 hours. Compute a 95% confidence interval for the mean hours
per month all students at the university work. (5)

2. A random sample of 26 checking accounts at a bank showed an average daily balance of $300 and a standard
deviation of $45. The balances of all checking accounts at the bank are normally distributed. Develop a 95%
confidence interval estimate for the mean of the population. (5)

3. The average gasoline price of one of the major oil companies has been $1.00 per gallon. Because of shortages in
production of crude oil, it is believed that there has been a significant increase in the average price. In order to test
this belief, we randomly selected a sample of 36 of the company's gas stations and determined that the average
price for the stations in the sample was $1.10. Assume that the standard deviation of the population ( ) is $0.12.
(9)
a. State the null and the alternative hypotheses.
b. Test the claim at   .05.
c. Estimate the p-value associated with the above sample results.

4. The following sample information is given concerning the ACT scores of high school seniors form two local
schools.

School A School B
n1  14 n2  15
 25  23
 16  10

Develop a 95% confidence interval estimate for the difference between the two populations. (5)

5. The management of Recover Fast Hospital (RFH) claims that the average length of stay in their hospital after a
major surgery is less than the average length of stay at General Hospital (GH). The following data have been
accumulated to test their claim. (9)
RFH GH
Sample size 45 58
Mean (in days) 4.6 4.9
Population Standard Deviation () 0.5 0.6

a. Formulate the hypotheses.

b. Compute the test statistic.
c. Using the p-value approach, test to see if the average length of stay in RFH is significantly
less than the average length of stay in GH. Let   0.05.

6. In order to estimate the difference between the average mortgages in the southern states and the northern states, the
following information was gathered.
Southern Northern
Sample Size 40 45
Sample Mean (in $1,000) $170 $175
Sample Standard Deviation (in $1,000) $5 $7
Develop an interval estimate for the difference between the average of the mortgages in the
 South and North. Let alpha  0.05 and degrees of freedom = 79 (5)

7. Information regarding the ACT scores of samples of students in three different majors is given below. (9)

Major
Management Finance Accounting
28 22 29
26 23 27
25 24 26
27 22 28
21 24 25
19 26 26
27 27 28
17 29 20
17 28 20
23 24
28
28
29
Sums 230 225 338
Means 23 25 26
Variances 18 6.75 9.33

a. What are the null and alternative hypotheses?

b. The results of your statistical test are given below. Do you accept or reject the null hypothesis? Explain.
c. What is your conclusion regarding the null hypothesis?

ANOVA
Source of Variation SS df MS p-value F F crit
Between Groups 51.468 2 25.73 0.1248 2.27 3.33
Within Groups 328 29 11.31
Total 379.468 31

8. The office of records at a university has stated that the proportion of incoming female students who major in
business has increased. A sample of female students taken several years ago is compared with a sample of female
students this year. Results are summarized below. Has the proportion increased significantly? Test at alpha  .10.
(9)

Sample Size No. Majoring in Business

Previous Sample (p) 250 75
Current Sample (c) 300 69