LUBS267001

UNIVERSITY OF LEEDS
Semester One 2018/2019

Statistics for Business and Economics 2

ANSWERS
QUESTION ANSWER QUESTION ANSWER
1 E 31 B
2 D 32 C
3 E 33 C
4 C 34 A
5 C 35 C
6 A 36 C
7 E 37 D
8 B 38 E
9 E 39 C
10 C 40 D
11 D 41 A
12 D 42 B
13 C 43 E
14 E 44 D
15 C 45 D
16 C 46 B
17 C 47 A
18 D 48 B
19 A 49 C
20 A 50 B
21 E 51 A
22 B 52 C
23 C 53 C
24 D 54 C
25 D 55 A
26 B 56 B
27 B 57 E
28 C 58 D
29 C 59 A
30 A 60 A

2
1. If X and Y are continuous random variables and f  x, y  is their joint probability
distribution, the general definition of marginal distribution of Y is

b
f y   f x, y dx for c yd
x a

In our case,

f  x, y   x y  x  , 0  x  2 , 0  y  2
1
8

So we have

2
f y  x y  x  dx
1

x 0
8

ANSWER: E

2
 2 
x y  x  dx  1  x y  x   1  4 y  0 
2 2
4 0
f y 
1
2. 
x 0
8 8 2 2  0 8  2
 y
2 2
 
2 


1
2 y  2  2  y  1  1  y  1
8 8 4

Therefore, the marginal distribution of Y is

f y   y  1 ,
1
0 y2
4

ANSWER: D

3. If X and Y are continuous random variables and f  x, y  is their joint probability

distribution, the general definition of marginal distribution of X is

d
f x    f x, y  dy for a xb
y c

In our case,

f  x, y   x y  x  , 0  x  2 , 0  y  2
1
8

3
 So we have

2
f x   x y  x  dy
1

y 0
8

ANSWER: E

x y  x  dy  1  x y  x y   1  x 4  x  2    x 0  x  0  
2 2
f x  
1
4. 
y 0
8 8 2  0 8  2   2 


1
2 x  2 x   1 4 x   1 x
8 8 2

Therefore, the marginal distribution of X is

f x  
1
x, 0 x2
2

ANSWER: C

5. The formula for the required conditional distribution is

 3  13 3 1 3
f  X  , y  y    y  1
 3  2  82 2 8 2
fy X     
 2  3 1 3

1 3

fX  
 2 2 2 2 2

1
 y  1 1
  y  1    y  1
2 1
8
1 8 1 4
2

3
Therefore, the conditional probability distribution of Y given X  is
2

 3 1
f  y X     y  1 , 0 y2
 2 4

ANSWER: C

4
  3  3
2 2
1 
6. E Y X    y 0 y  f  y X  2  dy   y   y  1 dy 
 2 y 0 4 

2
1  y3 y2  1  8 4   0 0  
y 0 y  y dy  4  3  2   4  3  2    3  2  
2
1
 2

4 0

1 8  1  8 6  1  14  1  7  7
   2           
43  4  3 3 4  3  2  3 6

ANSWER: A

7. The random variables X and Y are independent if f  x  f  y   f x, y  . In terms of

conditional probability, this implies:

f  x, y  f  x  f  y 
f y x     f y  x, y over the whole ranges of their
f x  f x 
possible values

3
For the marginal distribution of Y and the conditional distribution of Y given X 
2
we have:

f y   y  1 ,
1
0 y2 as we saw in answer 2
4

 3 1
f  y X     y  1 , 0 y2 as we saw in answer 5
 2 4

Thus f  y x   f  y  and therefore X and Y are independent.

ANSWER: E

8. We can use the following property of the probability density function ( pdf ) f  x  of
a continuous random variable:

 f x  dx  1,
a
axb

i.e. the sum of all probabilities is equal to 1.

5
 In our case f x  
1
c , 5  x  25 , therefore we have
8

  1  dx  c  x 5
25 25
1  25
c 25  5  c 20   c  1
1 1 1 1 5
x 5  8 c  dx  c
 8 x 5
8

8 8 2

5 2
 c 1  c 
2 5

Alternatively, since for a uniform pdf

f x  
1
, axb
ba

in our case we have

f x  
1 1 1
  c
25  5 20 8

1 1 1 2
 c  c 8 
8 20 20 5

f x  
1 2 1 1 1
The pdf is therefore:     , 5  x  25
8 5 4 5 20

ANSWER: B

9. The amount of pollutants discarded to the environment by the U.S. paper industry per
year is a random variable X uniformly distributed between 5 and 25 (tonnes). Its pdf
is:

f x  
1
c, 5  x  25
8

The general definition of cumulative probability distribution for a continuous random

variable is

x
F x    f t dt , a xb
t a

So in our case

x
1 
F  x     c  dt , 5  x  25
8 
t 5

6
 ANSWER: E

x x x x
1  1 2  1 
F  x     c  dt      dt     dt    1  dt 
1
10.
t 5
8  t 5
8 5 t 5
20  20 t 5


1
 t 5x  1 x  5  1 x  5  1 x  1
20 20 20 20 20 4

The cumulative probability distribution is therefore:

F x  
1 1
x , 5  x  25
20 4

ANSWER: C

11. We use the property of the cpd F  x  :

P a  X  b   F b   F a 

In our case, since 5  x  25 , we have

P  X  20  P 20  X  25  F 25  F 20 

ANSWER: D

Using F  x  
1 1
12. x :
20 4

F 25 
1 1 5 1 4
 25      1
20 4 4 4 4

F 20 
1 1 1 3
 20   1  
20 4 4 4

Therefore

P  X  20  F 25  F 20  1 

3 1
  0.25  25%
4 4

ANSWER: D

7
13. If Y  d  e X is a linear transformation of X – where d and e are constants – the
expected value (mean) of Y , E Y  , is given by the formula for the expectation of a
linear transformation of a random variable:

E Y   E d  e X   d  e E  X 

Since Y  0.2  0.5 X , in our case d  0.2 and e  0.5 .

From the properties of the uniform distribution, we know that

ab
f x   EX  
1
for , a  x  b:
ba 2

In our case

5  25 30
f x   EX  
1
for , 5  x  25 :   15
20 2 2

So we have:

E Y   0.2  0.5 15  0.2  7.5  7.7 in $1,000,000s

i.e. the mean annual social cost is $7,700,000 .

ANSWER: C

14. If Y  d  e X is a linear transformation of X – where d and e are constants – the

variance of Y , var Y  , is given by the formula for the variance of a linear
transformation of a random variable:

var Y   var d  e X   e 2 var  X 

Since Y  0.2  0.5 X , in our case d  0.2 and e  0.5 .

From the properties of the uniform distribution, we know that

for f x  
1
, a  x  b: var  X  
b  a
2

ba 12

In our case

for f x  
1
, 5  x  25 : var  X  
25  5 2 
202
20 12 12

8
 So for the variance of annual social cost we have:

 20 2 
var Y   0.52  
 12 

Taking the square root of both sides, we have the standard deviation of annual social
cost:

 20  10
SD Y   0.5    2.886751 in $1,000,000s
 12  12

i.e. the standard deviation of annual social cost is $2,886,751 .

ANSWER: E

15. If X and Y are discrete random variables and f  x, y  is their joint probability
distribution, the general definition of marginal distribution of X is

f  x    f  x, y  , x  x1 , x2 , ..., xn
y

In our case, f  x, y   y x  y  ,
1
x  1, 2, 3, 4 , y  1, 2, 3, 4, 5 . So we have
370

5
f x    y x  y 
1
y 1 370

ANSWER: C

5
f x    y x  y  
1
16.
y 1 370

1  
 x y  y   370  x  y   y
5 5 5
1
 2 2


370 y 1  y 1 y 1 


1
x  15  55  5 3x  11  1 3x  11
370 370 74

Therefore, the marginal distribution of X is

f x   3x  11 ,
1
x  1, 2, 3, 4
74

9
 ANSWER: C

4
17. E  X    x f x  
x 1

 3x  11x  
4 4
  x
1
3x  11  1 2

x 1 74 74 x 1

1  4 2 4
 1
  3  x  11  x   3  30  11  10  1 90  110 
74  x 1 x 1  74 74


1
200  100  2.7027
74 37

ANSWER: C

E X  
4
18. 2
x 2 f x  
x 1

 3x  11x 2  
4 4
 x 
2 1
3x  11  1 3

x 1 74 74 x 1

1  4 3 4
 1
  3  x  11  x 2   3  100  11  30  1 300  330 
74  x 1 x 1  74 74


1
630  315  8.5135
74 37

ANSWER: D

var  X   E X 2   E  X  
2
19.

315 10000 315  37  10000

2
315  100 
      
37  37  37 37 2 37 2

11655  10000 1655

   1.2089
1369 1369

ANSWER: A

10
20. If X and Y are discrete random variables and f  x, y  is their joint probability
distribution, the general definition of marginal distribution of Y is

f  y    f  x , y , y  y1 , y2 , ..., ym
x

In our case, f  x, y   y x  y  ,
1
x  1, 2, 3, 4 , y  1, 2, 3, 4, 5 . So we have
370

4
f y   y x  y 
1
x 1 370

ANSWER: A

4
f y   y x  y  
1
21.
x 1 370

1  
 x y  y   370   x  y   y
4 4 4
1
 2 2

370 x 1  x 1 x 1 


1
370
10 y  4 y 2  
2
370
5y  2 y2  
1
185
2 y2  5y

Therefore, the marginal distribution of Y is

f y 
1
185
2 y 2  5 y , y  1, 2, 3, 4, 5

ANSWER: E

5
22. E Y    y f  y  
y 1

2 y2  5y   2 y  5y2  
5 5
1 1
  y 3

y 1 185 185 y 1

1  5 3 5 
 2  y  5  y2  
 
1
2  225  5  55  1 450  275 
185  y 1 y 1  185 185


1
725  145  3.9189
185 37

11
 ANSWER: B

E Y 2    y 2 f  y  
5
23.
y 1

2 y2  5y   2 y  5y3  
5 5
1 1
  y2  4

y 1 185 185 y 1

1  5 4 5 
 2  y  5  y3  
 
1
2  979  5  225  1 1958  1125 
185  y 1 y 1  185 185

3083
  16.6649
185

ANSWER: C

var Y   E Y 2   E Y  
2
24.

3083 21025 3083  37  21025  5

2
3083  145 
      
185  37  37  5 37 2 37 2  5

114071  105125 8946

   1.3069
6845 6845

ANSWER: D

25. If X and Y are discrete random variables and f  x, y  is their joint probability
distribution, the general definition of expected value of the product of X and Y is

E  XY     x y f x, y  , x  x1 , x 2 , ..., x n , y  y1 , y 2 , ..., y m

x y

In our case, f  x, y   y x  y  ,
1
x  1, 2, 3, 4 , y  1, 2, 3, 4, 5 . So we have
370

4 5
E  XY     x y  370 y x  y  
1
x 1 y 1

 370 x y2  x y3 
4 5
1
 2

x 1 y 1

12
 ANSWER: D

 370 x y2  x y3  
4 5
E  XY   
1 2
26.
x 1 y 1

x2 y2  x y3    x y2  x y3  
4 5
1 1 4 5
   2

x 1 y 1 370 370 x 1 y 1

1  4 5 4 5 
   x2 y2   xy 3

 
370  x 1 y 1 x 1 y 1 

1  4 2 5 2 4 5
 1  4 2 4

 x  y   x  y3  
   370 
 x  55   x  225  
370  x 1 y 1 x 1 y 1   x 1 x 1 

5  4 2 4
 1
 11  x  45  x   11  30  45  10 
370  x 1 x 1  74


1
330  450  1 780  390  10.5405
74 74 37

ANSWER: B

27. cov X , Y   E  XY   E  X E Y  

390 100 145 390 14500 390  37  14500

      
37 37 37 37 37 2 37 2

14430  14500 70
   0.0511
1369 1369

ANSWER: B

cov  X , Y  cov  X , Y 
28. X,Y   
SD  X  SD Y  var  X   var Y 

70 70 1
  2
 70  2
 1369  37  37 
1655 8946 1655 8946 1 1655 1 8946
  
1369 6845 37 2 37 2  5 37 1 37 5

13
  70  70  70
    0.0407
1655 8946 40.6817  42.2989 1720.7912

1 5

ANSWER: C

29. We can apply the formula for the expected value of the sum of two functions of X
and Y :

E g1  X   g 2 Y    E g1  X    E g 2 Y  

In our case W  0.30  0.25 X  0.45 Y , so g1  X   0.30  0.25 X and g 2 Y   0.45 Y .

We know from answers 17 and 22 that E  X   and E Y  

100 145
. So for the
37 37
expected value of weekly expenditure W we have:

E W   E 0.30  0.25 X  0.45 Y  

 E 0.30  0.25 X   E 0.45 Y  

 E 0.30   E 0.25 X   E 0.45 Y  

 0.30  0.25 E  X   0.45 E Y  

100 145 25 65.25

 0.30  0.25   0.45   0.30   
37 37 37 37

0.30  37  25  65.25 11.1  25  65.25

  
37 37

101.35
  2.7392 in £ ‘00
37

i.e. the expected value of weekly expenditure is £273.92 .

ANSWER: C

30. If a  bX  is a linear transformation of X , c  dY  is a linear transformation of Y ,

and W is their sum, i.e. W  a  bX   c  dY  – where a , b , c and d are
constants – the variance of W , var W  , is given by the formula for the variance of
linear transformations of two random variables:

14
 var W   b 2 var  X   d 2 var Y   2bd cov  X , Y 

Since W  0.30  0.25 X  0.45 Y , in our case a  0.30 , b  0.25 , c  0 and

d  0.45 . We know from answers 19, 24 and 27 that var  X   , var Y  
1655 8946
1369 6845
and cov  X , Y   
70
. So we have:
1369

var W   0.252 var  X   0.452 var Y   20.250.45 cov  X , Y  

1655 8946 70
 0.0625   0.2025   0.225   
1369 6845 1369

103.4375 1811 .565 15.75

   
37 2 37 2  5 37 2

103.4375  5  1811 .565  15.75  5 517.1875  1811.565  78.75

  
37 2  5 37 2  5

2250 .0025 450.0005 450.0005

    0.3287
37 2  5 37 2 1369

So for the standard deviation of weekly expenditure we have:

SDW   0.3287  0.5733 in £ ‘00

i.e. the standard deviation of weekly expenditure is £57.33 .

ANSWER: A

31. The sample mean of annual salaries for male employees is

nm 10

 Xmj
j 1
X
j 1
mj
280
Xm     28.00
nm 10 10

The sample mean of annual salaries for female employees is

nf 6

X
j 1
fj X
j 1
fj
156
Xf     26.00
nf 6 6

ANSWER: B

15
32. For the sample variance of annual salaries for male employees:

Xm Xm  Xm ( X m  X m )2
29 1 1
32 4 16
24 4 16
22 6 36
30 2 4
34 6 36
26 2 4
23 5 25
33 5 25
27 1 1
  164

 X  Xm  X  Xm
nm 10
2 2
mj mj
j 1 j 1 164
sm2     18.22
nm  1 10  1 9

ANSWER: C

33. For the sample variance of annual salaries for female employees:

Xf Xf Xf ( X f  X f )2
25 1 1
27 1 1
23 3 9
21 5 25
29 3 9
31 5 25
  70

 X Xf  X Xf
nf 6
2 2
fj fj
j 1 j 1 70
s 2f     14.00
nf 1 6 1 5

ANSWER: C

34. It is known from answers 32 that, for male employees, the sample size is nm  10
and the sample variance of annual salaries is

16
  X  Xm
nm
2
mj
j 1 164
sm2  
nm  1 9

Therefore

 X  Xm
nm
2
mj

  X m j  X m   164
nm
nm  1 sm2  nm  1 j 1 2

nm  1 j 1

It is known from answers 33 that, for female employees, the sample size is n f  6
and the sample variance of annual salaries is

 X Xf
nf
2
fj
j 1 70
s 2f  
nf 1 5

Therefore

 X Xf
nf
2
fj

n  1 s 2f  n f  1   X f j  X f   70
nf
j 1 2

nf 1
f
j 1

So the value of the pooled estimate of the common population variance is:

nm  1 sm2  n f  1 s 2f 164  70 234

s 
2
   16.71
nm  n f  2 10  6  2 14
p

ANSWER: A

35. It is known that the random variables X m (the annual salary for male employees) and
X f (the annual salary for female employees) are normally distributed. We also know
that annual salaries for male and female employees have a common population
variance, i.e.  m2   2f   2 . For two small samples ( nm  10 and n f  6 ), sampling
theory establishes that the sampling distribution of the difference between the two
sample means X m  X f  is:

 2  2 
X Xf  ~ N    f , 
n f 
m m
 nm

17
 The common population variance  m2   2f   2 is unknown and we replace it with
its sample estimate, the pooled estimate of the common population variance s 2p .

Therefore the 95% confidence interval for the difference between the population
mean annual salaries of male and female employees,  m   f  , is given by

s 2p s 2p
 m   f   X m  X f   t 

, nm  n f  2 
  
2
nm nf

 X m  X f   t0.025, 14  s p
1 1

nm n f

ANSWER: C

36. The critical value of t corresponding to the 95%  1   confidence level, i.e.

 0.05
  0.025
2 2

and

nm  n f  2  10  6  2  14

degrees of freedom is:

t0.025, 14

From the table of the t distribution we can find the required critical value:

t0.025, 14  2.1448

ANSWER: C

37. It is known from answer 31 that, for male employees, the sample mean of annual
salaries is X m  28.00 and the sample size nm  10 ; for female employees, the
sample mean of annual salaries is X f  26.00 and the sample size n f  6 . From
answer 34 we know that the pooled estimate of the common population variance is:

s 2p  16.71

From answer 36 we know that the required critical value of t is:

18
 t0.025, 14  2.1448

So the 95% confidence interval for the difference between population means
m   f  is:

 m   f   X m  X f   t0.025, 14 s p
1

1

nm n f

 28.00  26.00   2.1448 16.71

1 1
 
10 6

35
 2.00  2.1448  4.088 
30

4
 2.00  2.1448  4.088 
15

 2.00  2.1448  4.088  0.517 

 2.00  4.53 

  2.53, 6.53

ANSWER: D

38. The difference between mean annual salaries of male and female employees in the
population is some value between  2.53 and 6.53 with a 95% probability. Since
this interval includes the value 0, the confidence interval obtained includes the
possibility that the difference between mean annual salaries of male and female
employees  m   f  is equal to 0. There is therefore no evidence (with 95%
confidence) of a difference between annual salaries of male employees and annual
salaries of female employees, i.e. there is no evidence that the company discriminates
by gender.

ANSWER: E

39. For the test of the hypothesis that the financial analyst’s previous variance figure is
still the same, against the alternative hypothesis that it is now too low – ie, for the test
of the hypothesis that the population variance of the stock prices is still equal to 4 ,

19
 against the alternative hypothesis that it is now greater than 4 , the null and alternative
hypotheses are:

H0 :  2  4 H1 :  2  4

ANSWER: C

40. It is known that the random variable X (stock prices) is normally distributed and
that the sample is small ( n  8 ). The object of our inference is the population
variance  2 .

Therefore the test statistic is given by

n  1 s 2
 02

ANSWER: D

41. It is known that the sample size is n  8 , the sample standard deviation of the stock
prices s  7.80 , and the population variance under the null hypothesis  02  4 . So the
value of the test statistic is:

n  1 s 2 
8  1 7.802 
7 60.84  425.88  106.47
 2
0 4 4 4

ANSWER: A

42. It is known that the random variable X (stock prices) is normally distributed and
that the sample is small ( n  8 ).

Therefore the test statistic follows the  2 distribution:

n  1 s 2   2 ~  2 distribution with   n  1  8  1  7 degrees of freedom

 2
0

ANSWER: B

43. The test statistic follows the  2 distribution:

 2 ~  2 distribution with   7 degrees of freedom

20
 Since the alternative hypothesis takes the form H 1 :  2  4 , the test is one-tailed.

The required significance level for the test is   5% .

Therefore, the critical value for the test is:

 02.05, 7  14.067

95% 5%

0  72
14.067

ANSWER: E

44.

95% 5%

0  72
14.067

Do not Reject
reject H 0 H0

 if  2  14.067 , reject H 0
 if  2  14.067 , do not reject H 0

ANSWER: D

45. Since the test statistic  2  106.47  14.067 , we reject H 0 :  2  4 at the 5%

significance level in favour of the alternative H 1 :  2  4 . There is significant
evidence (at the 5% level) that the population variance of the stock prices is now

21
 greater than 4 – ie, there is significant evidence (at the 5% level) that the financial
analyst’s previous variance figure is now too low.

ANSWER: D

46. If X 15  20 is the number of companies who did not pay students and recent
graduates on work experience or internship programmes in 2015, X 17  16 the
number of such companies in 2017, n15  80 the size of the sample of companies in
2015, and n17  80 the size of the sample of companies in 2017, sampling theory
X X
establishes that the sample proportions P15  15 and P17  17 are unbiased point
n15 n17
estimators of the corresponding population proportions  15 and  17 , i.e., E P15    15
and E P17    17 . Therefore:

X 15 20 X 17 16
P15    0.25 and P17    0.20
n15 80 n17 80

are unbiased point estimators of  15 and  17 .

ANSWER: B

47. For the test of the null hypothesis that the population proportion of companies who
did not pay students and recent graduates on work experience or internship
programmes in 2015 was equal to 27% , against the alternative that the population
proportion of such companies was different from 27% , the null and alternative
hypotheses are:

H 0 :  15  0.27 H 1 :  15  0.27

ANSWER: A

48. For the large sample of companies in 2015 ( n15  80 ) taken from a large population
without replacement, we do not need to use the finite population correction of the
variance.

Sampling theory establishes that the sampling distribution of the sample proportion
P15 is:
  (1   15 ) 
P15 ~ N   15 , 15 
a
 n15 

22
 The population proportion  15 is unknown. So we use the hypothetical value of  15
under the null hypothesis,  15 0 , in estimating the standard error of the sample
proportion P15 , SE P15  .

Therefore the test statistic is given by

P15   15 0 P15   15 0

 15 0 (1   15 0 )
SE P15 
n15

ANSWER: B

49. It is known that the sample size is n15  80 and the hypothetical value of  15 under
the null hypothesis  15 0  0.27 . It is also known from answer 46 that the sample
proportion of companies who did not pay students and recent graduates on work
experience or internship programmes in 2015 is P15  0.25 . So the value of the test
statistic is:

P15   15 0 0.25  0.27  0.02  0.02

   
 15 0 (1   15 0 ) 0.27(1  0.27) 0.27(0.73) 0.1971
n15 80 80 80

 0.02  0.02
   0.40
0.0025 0.05

ANSWER: C

50. Since the sampling distribution of the sample proportion P15 is normal:

  (1   15 ) 
P15 ~ N   15 , 15 
a
 n15 

the test statistic follows the standard normal distribution:

P15   15 0
 Z ~ N 0, 1
 15 0 (1   15 0 )
n15

ANSWER: B

23
51. The test statistic follows the standard normal distribution:

Z ~ N 0, 1

Since the alternative hypothesis takes the form H 1 :  15  0.27 , the test is two-
tailed.

The required significance level is   1% .

Therefore, the critical value for the test is:

z0.005  2.5758

1
0.5% 0.5%
99%

0 Z
 2.5758 2.5758

ANSWER: A

52.

1
0.5% 0.5%
99%

0 Z
 2.5758 2.5758

Reject Do not Reject

H0 reject H 0 H0

 if Z  2.5758 , reject H 0
 if Z  2.5758 , do not reject H 0

ANSWER: C

24
53. Since the test statistic  2.5758  Z  0.40  2.5758 , we do not reject
H 0 :  15  0.27 at the 1% significance level in favour of the alternative
H 1 :  15  0.27 . There is no significant evidence (at the 1% level) that the
population proportion of companies who did not pay students and recent graduates on
work experience or internship programmes in 2015 was different from 27% .

ANSWER: C

54. For the test of the null hypothesis that the proportion of companies who did not pay
either wages or expenses to students and recent graduates on work experience or
internship programmes in 2017 is the same as in 2015, against the alternative
hypothesis that the proportion of such companies in 2017 is smaller than in 2015, the
null and alternative hypotheses are:

H 0 :  17   15 H 1 :  17   15

that is

H 0 :  17   15  0 H 1 :  17   15  0

ANSWER: C

55. For the large sample of companies in 2015 ( n15  80 ) taken from a large population
without replacement, we do not need to use the finite population correction of the
variance.

For the large sample of companies in 2017 ( n17  80 ) taken from the same large
population without replacement, we do not need to use the finite population
correction of the variance.

Sampling theory establishes that the sampling distribution of the difference between
the two sample proportions P17  P15  is:

P17  P15  ~a N   17   15 ,  17 (1   17 )   15 (1   15 ) 
 
 n17 n15 

The population proportions  17 and  15 are unknown. So we use the sample

proportions P17 and P15 , the unbiased point estimators of  17 and  15 , in estimating
the standard error of the difference between the two sample proportions P17  P15  ,
SE P17  P15  .

Therefore the test statistic is given by

25
 P17  P15    17   15 0 P17  P15    17   15 0

P17 1  P17  P15 1  P15 
SE P17  P15  
n17 n15

ANSWER: A

56. It is known that, in 2017, the sample size is n17  80 and, from answer 46, the sample
proportion of companies who did not pay students and recent graduates on work
experience or internship programmes is P17  0.20 ; in 2015, the sample size is
n15  80 and, from answer 46, the sample proportion of such companies is P15  0.25 .
It is also known that the difference between population proportions under the null
hypothesis is  17   15 0  0 . So the value of the test statistic is:

P17  P15    17   15 0 0.20  0.25  0

 
P17 1  P17  P15 1  P15  0.201  0.20 0.251  0.25
 
n17 n15 80 80

 0.05  0.05
  
0.200.80 0.250.75 0.16 0.1875
 
80 80 80 80

 0.05  0.05  0.05

    0.76
0.3475 0.0043 0.066
80

ANSWER: B

57. Since the sampling distribution of the difference between the two sample proportions
P17  P15  is normal:

P17  P15  ~a N   17   15 ,  17 (1   17 )   15 (1   15 ) 
 
 n17 n15 

the test statistic follows the standard normal distribution:

P17  P15    17   15 0
 Z ~ N 0, 1
P17 1  P17  P15 1  P15 

n17 n15

ANSWER: E

26
58. The test statistic follows the standard normal distribution:

Z ~ N 0, 1

Since the alternative hypothesis takes the form H 1 :  17   15  0 , the test is one-
tailed (left-hand side tail).

The required significance level is   1% .

Therefore, the critical value for the test is:

z 0.99  2.3263

1
1%
99%

0 Z
 2.3263

ANSWER: D

59.

1
1%
99%

0 Z
 2.3263

Reject Do not
H0 reject H 0

 if Z  2.3263 , reject H 0
 if Z  2.3263 , do not reject H 0

ANSWER: A

27
60. Since the test statistic Z  0.76  2.3263 , we do not reject H 0 :  17   15 at the
1% significance level in favour of the alternative H 1 :  17   15 . There is no
significant evidence (at the 1% level) that the population proportion of companies
who did not pay students and recent graduates on work experience or internship
programmes in 2017 was smaller than in 2015.

ANSWER: A

28