Quiz 2 [SET A]

Q-1: The head office of an international bank instructs the branch managers to ensure that the
average queuing time for customers waiting to see a cashier is no more than 5 minutes. If this is
not followed, a penalty is likely to be imposed and if things are as per the directive of head office,
a bonus will be paid to branch’s employees. You are assigned by the head office to undertake an
audit to check that average waiting time is in accordance with the senior executives’ directive.
a) State the null and alternative hypotheses you will be using in this instance.
b) What is Type I error here and what are its consequences?
c) What is Type II error here and what are its consequences?
Q-2: A courier service advertises that its average delivery time is less than 6 hours for local
deliveries. A random sample of times for 12 deliveries to an address across town was recorded.
These data (delivery times in hours) are shown here.
3.03 6.33 6.50 5.22 3.56 6.76 7.98 4.82 7.96 4.54 5.09 6.46
[Note:∑ 𝑥 2 = 415.65]. Is there sufficient evidence to support the courier’s advertisement, at the
5% level of significance? Assuming normality of delivery times.
Q-3: Between Wendy’s and McDonald’s, which fast-food drive-through window is faster? To
answer the question, a random sample of service times for each restaurant was measured. Can we
infer from these data that there are differences in service times (in seconds) between the two
chains? Use 𝛼 = 0.05 and assume normality of service times.
Wendy’s: 𝑛1 = 20, ̅𝑥1 =158.8, 𝑠1 = 26.66
McDonald’s: 𝑛2 = 15, 𝑥̅2 =152.0, 𝑠2 = 25.21
------------------------------------------
𝑛 ∑ 𝑥 2 −(∑ 𝑥)2 ∑𝑥 𝑥̅ −𝜇0 𝑥̅ −𝜇0
𝑠=√ , 𝑥̅ = ,𝑧= 𝜎 , 𝑡 = 𝑠 , DF : n-1
𝑛(𝑛−1) 𝑛 ⁄ 𝑛 ⁄ 𝑛
√ √
(𝑛1 −1)𝑠12 +(𝑛2 −1)𝑠22 ̅̅̅̅
𝑋1 −𝑋̅̅̅̅
2 −(𝜇1 −𝜇2 )
𝑠𝑝 = √ ,𝑡= , DF: 𝑛1 + 𝑛2 − 2
𝑛1 +𝑛2 −2 𝑠𝑝 √𝑛 +𝑛
1 1
1 2
2
𝑠2 𝑠2
(𝑛1 +𝑛2 )
̅̅̅̅
𝑋1 −𝑋̅̅̅̅
2 −(𝜇1 −𝜇2 ) 1 2 𝑑̅ −(𝜇1 −𝜇2 )
𝑡= , 𝐷𝐹 ≅ 𝑠2 𝑠2
, Paired t test: t = 𝑠𝑑 ,
𝑠 2𝑠 2 ( 1⁄𝑛1 )2 ( 2⁄𝑛2 )2 ⁄
√ 1+ 2 + 𝑛 −1 √𝑛
𝑛1 𝑛2 𝑛1 −1 2
2
∑𝑑 𝑛 ∑ 𝑑𝑖2 − (∑ 𝑑𝑖 )
𝑑̅ = 𝑖 and 𝑠𝑑 = √ , DF = n-1
𝑛 𝑛(𝑛−1)
 Quiz 2 [SET B]
Q-1: A fast-food chain is considering building a restaurant at a certain location. Based on financial
analysis, a location site is acceptable only if the number of pedestrians passing the location
averages more than 100 per hour. In that case the chain is expected to realize a profit of 2 million
dollars per year at the proposed site. In case their decision is wrong, the chain is expected to suffer
a loss of investment worth $200,000.
a) State the null and alternative hypotheses you will be using in this instance.
b) What is Type I error here and what are its financial consequences?
c) What is Type II error here and what are its financial consequences?
Q-2: A random sample of 12 second-year university students enrolled in a business statistics
course was drawn. The instructor has recommended that students devote a total of 36 hours for the
semester. At the course’s completion, each student was asked how many hours he or she spent
doing homework in statistics for the semester. The data are listed here.
31 40 26 30 36 38 29 40 38 30 35 38.
Test to determine whether there is evidence that the average student spent less than the
recommended amount of time for the semester. [Note:∑ 𝑥 2 = 14331] Use 𝛼 = 0.05, assuming that
hours of study are normally distributed.
Q-3: A study of iron deficiency among infants compared samples of infants following different
feeding regimens. One group contained breast-fed infants, while the children in another group
were fed a standard baby formula without any iron supplements. Here are summary results on
blood hemoglobin levels at 12 months of age.
Group n 𝑥̅ s
Breast-fed 23 13.3 1.7
Formula Fed 19 12.4 1.8
Assuming blood hemoglobin are normally distributed, test at 5% level whether there is significant
evidence that the mean hemoglobin level is higher among breast-fed babies than the formula fed?
𝑛 ∑ 𝑥 2 −(∑ 𝑥)2 ∑𝑥 𝑥̅ −𝜇0 𝑥̅ −𝜇
𝑠=√ , 𝑥̅ = ,𝑧= 𝜎 , 𝑡= 𝑠 0 , DF : n-1
𝑛(𝑛−1) 𝑛 ⁄ 𝑛 ⁄ 𝑛
√ √
(𝑛1 −1)𝑠12 +(𝑛2 −1)𝑠22 ̅̅̅̅
𝑋1 −𝑋̅̅̅̅
2 −(𝜇1 −𝜇2 )
𝑠𝑝 = √ ,𝑡= , DF: 𝑛1 + 𝑛2 − 2
𝑛1 +𝑛2 −2 1
𝑠𝑝 √+
1
𝑛1 𝑛2
2
𝑠21 𝑠2
2
(𝑛 +𝑛 )
̅̅̅̅
𝑋1 −𝑋̅̅̅̅
2 −(𝜇1 −𝜇2 ) 1 2 𝑑̅ −(𝜇1 −𝜇2 )
𝑡= , 𝐷𝐹 ≅ 𝑠2 𝑠2
, Paired t test: t = 𝑠𝑑 ,
𝑠 2
𝑠 2 ( 1⁄𝑛1 )2 ( 2⁄𝑛2 )2 ⁄
√ 1+ 2 + 𝑛 −1 √𝑛
𝑛1 𝑛2 𝑛1 −1 2
2
∑𝑑 𝑛 ∑ 𝑑𝑖2 − (∑ 𝑑𝑖 )
𝑑̅ = 𝑖 and 𝑠𝑑 = √ , DF = n-1
𝑛 𝑛(𝑛−1)
 Quiz 2 [SET C]
Q-1: A fast-food chain is considering building a restaurant at a certain location. Based on financial
analysis, a site is acceptable only if the number of pedestrians passing the location averages more
than 100 per hour. In that case the chain is expected to realize a profit of 2 million dollars per year.
In case their decision is wrong, the chain is expected to suffer a loss of investment worth $200,000.
a) State the null and alternative hypotheses you will be using in this instance.
b) What is Type I error here and what are its financial consequences?
c) What is Type II error here and what are its financial consequences?
Q-2: Past experience indicates that the monthly long-distance telephone bill is normally distributed
with a mean of $17.85. After an advertising campaign aimed at increasing long-distance telephone
usage, a random sample of 12 household bills was taken which yielded the following sample bills:
22.2 16.3 21.6 21.6 24.5 14.5 17.2 23.5 22.6 20.3 22.1 1
2
17.9. [Note:∑ 𝑥 = 5081.91]
Do the data allow us to infer at the 10% significance level that the campaign was successful?
Q-3: The College Board SAT college entrance exam consists of three parts: math, writing, and
critical reading. Sample data showing the math and writing scores for a sample of 8 students who
took the SAT follow. Use a 0.05 level of significance and test for a difference between the
population mean for the math scores and the population mean for the writing scores.
Student 1 2 3 4 5 6 7 8
Math 540 480 432 499 528 610 574 502
Writing 474 430 380 459 463 615 612 526
2
𝑛 ∑ 𝑥 2 −(∑ 𝑥) ∑𝑥 𝑥̅ −𝜇0 𝑥̅ −𝜇
𝑠=√ , 𝑥̅ = ,𝑧= 𝜎 , 𝑡= 𝑠 0 , DF : n-1
𝑛(𝑛−1) 𝑛 ⁄ 𝑛 ⁄ 𝑛
√ √
(𝑛1 −1)𝑠12 +(𝑛2 −1)𝑠22 ̅̅̅̅
𝑋1 −𝑋̅̅̅̅
2 −(𝜇1 −𝜇2 )
𝑠𝑝 = √ ,𝑡= , DF: 𝑛1 + 𝑛2 − 2
𝑛1 +𝑛2 −2 𝑠𝑝 √𝑛 +𝑛
1 1
1 2
2
𝑠2
1 𝑠2
2
(𝑛 +𝑛 )
̅̅̅̅
𝑋1 −𝑋̅̅̅̅
2 −(𝜇1 −𝜇2 ) 1 2 𝑑̅ −(𝜇1 −𝜇2 )
𝑡= , 𝐷𝐹 ≅ 𝑠2 𝑠2
, Paired t test: t = 𝑠𝑑 ,
𝑠2 𝑠2 ( 1⁄𝑛1 )2 ( 2⁄𝑛2 )2 ⁄
√ 1+ 2 + 𝑛 −1 √𝑛
𝑛1 𝑛2 𝑛1 −1 2
2
∑𝑑 𝑛 ∑ 𝑑𝑖2 − (∑ 𝑑𝑖 )
𝑑̅ = 𝑖 and 𝑠𝑑 = √ , DF = n-1
𝑛 𝑛(𝑛−1)

Right Tail Critical Values of the Student T Distribution

df 0.1 0.05 0.025 0.01 0.005
1 3.078 6.314 12.706 31.821 63.657
2 1.886 2.920 4.303 6.965 9.925
7 1.415 1.895 2.365 2.998 3.499
8 1.397 1.860 2.306 2.896 3.355
9 1.383 1.833 2.262 2.821 3.250
10 1.372 1.812 2.228 2.764 3.169
11 1.363 1.796 2.201 2.718 3.106
16 1.336 1.746 2.119 2.583 2.921
 Quiz 2 [SET D]
Q-1: In the court system, a defendant is assumed innocent until proven guilty.
Suppose that you regard a court trial as a hypothesis test with null and alternative hypotheses
Ho: Defendant is innocent H1: Defendant is guilty
a) Explain the meaning of a Type I error in this context.
b) Explain the meaning of a Type II error in this context.
c) If you were the defendant, would you want probability of type II error to be large or small?
Explain your answer.
Q-2: The International Air Transport Association surveys business travelers to develop quality
ratings for transatlantic gateway airports. The maximum possible rating is 10. Suppose a simple
random sample of 12 business travelers is selected and each traveler is asked to provide a rating
for the Miami International Airport. The ratings obtained from the sample of 12 business travelers
follow. 7 8 7 5 9 5 8 4 3 8 5 5
At the 5% level of significance test that the average rating at the Miami Airport is at least 6. [For
your info, ∑ 𝑥 2 = 496]
Q-3: Suppose employees at a manufacturing company can use two different methods to perform
production of electronic clocks in order to identify the method with the smaller population mean
completion time. Seven workers are assigned to complete the task. Each worker first uses one
method and then uses the other method. The order of the two methods is assigned randomly to the
workers. The data on completion times (in minutes) are provided below:
Worker 1 2 3 4 5 6 7
Method 1 7.2 6.9 7.5 6.9 5.4 7.3 6.9
Method 2 5.3 5 6.5 5.6 6.3 5.8 6.1
Test, at 5% level, whether the average completion time using the two methods are same.
𝑛 ∑ 𝑥 2 −(∑ 𝑥)2 ∑𝑥 𝑥̅ −𝜇0 𝑥̅ −𝜇0
𝑠=√ , 𝑥̅ = ,𝑧= 𝜎 , 𝑡 = 𝑠 , DF : n-1
𝑛(𝑛−1) 𝑛 ⁄ 𝑛 ⁄ 𝑛
√ √
(𝑛1 −1)𝑠12 +(𝑛2 −1)𝑠22 ̅̅̅̅
𝑋1 −𝑋̅̅̅̅
2 −(𝜇1 −𝜇2 )
𝑠𝑝 = √ ,𝑡= , DF: 𝑛1 + 𝑛2 − 2
𝑛1 +𝑛2 −2 1
𝑠𝑝 √𝑛 +𝑛
1
1 2
2 2 2
𝑠 𝑠
(𝑛1 +𝑛2 )
̅̅̅̅
𝑋1 −𝑋̅̅̅̅
2 −(𝜇1 −𝜇2 ) 1 2 𝑑̅ −(𝜇1 −𝜇2 )
𝑡= , 𝐷𝐹 ≅ 𝑠2 𝑠2
, Paired t test: t = 𝑠𝑑 ,
𝑠 2𝑠 2 ( 1⁄𝑛1 )2 ( 2⁄𝑛2 )2 ⁄
√ 1+ 2 + 𝑛 −1 √𝑛
𝑛1 𝑛2 𝑛1 −1 2
2
∑𝑑 𝑛 ∑ 𝑑𝑖2 − (∑ 𝑑𝑖 )
𝑑̅ = 𝑖 and 𝑠𝑑 = √ , DF = n-1
𝑛 𝑛(𝑛−1)
 Quiz 2 [SET E]
Q-1: The head office of an international bank instructs the branch managers to ensure that the
average queuing time for customers waiting to see a cashier is no more than 5 minutes. If this is
not followed, a penalty is likely to be imposed and if things are as per the directive of head office,
a bonus will be paid to branch’s employees. You are assigned by the head office to undertake an
audit to check that average waiting time is in accordance with the senior executives’ directive.
a) State the null and alternative hypotheses you will be using in this instance.
b) What is Type I error here and what are its consequences?
c) What is Type II error here and what are its consequences?
Q-2: A random sample of 12 second-year university students enrolled in a business statistics
course was drawn. The instructor has recommended that students devote a total of 36 hours for the
semester. At the course’s completion, each student was asked how many hours he or she spent
doing homework in statistics for the semester. The data are listed here.
31 40 26 30 36 38 29 40 38 30 35 38.
Test to determine whether there is evidence that the average student spent less than the
recommended amount of time for the semester. [Note:∑ 𝑥 2 = 14331] Use 𝛼 = 0.05.
Q-3: Periodically, Merrill Lynch customers are asked to evaluate Merrill Lynch financial
consultants and services. Maximum service rating is 7. Independent samples of service ratings for
two financial consultants are summarized here. Consultant A has 10 years of experience, whereas
consultant B has 1 year of experience. Use α = 0.05 test to see whether the consultant with more
experience has the higher population mean service rating given the following sample information.
Sample size Sample mean Sample SD
Consultant A 16 6.82 0.64
Consultant B 10 6.25 0.75
𝑛 ∑ 𝑥 2 −(∑ 𝑥)2 ∑𝑥 𝑥̅ −𝜇0 𝑥̅ −𝜇
𝑠=√ , 𝑥̅ = ,𝑧= 𝜎 , 𝑡= 𝑠 0 , DF : n-1
𝑛(𝑛−1) 𝑛 ⁄ 𝑛 ⁄ 𝑛
√ √
(𝑛1 −1)𝑠12 +(𝑛2 −1)𝑠22 ̅̅̅̅
𝑋1 −𝑋̅̅̅̅
2 −(𝜇1 −𝜇2 )
𝑠𝑝 = √ ,𝑡= , DF: 𝑛1 + 𝑛2 − 2
𝑛1 +𝑛2 −2 1
𝑠𝑝 √𝑛 +𝑛
1
1 2
2
𝑠2
1 𝑠2
2
(𝑛 +𝑛 )
̅̅̅̅
𝑋1 −𝑋̅̅̅̅
2 −(𝜇1 −𝜇2 ) 1 2 𝑑̅ −(𝜇1 −𝜇2 )
𝑡= , 𝐷𝐹 ≅ 𝑠2 𝑠2
, Paired t test: t = 𝑠𝑑 ,
𝑠2 𝑠2 ( 1⁄𝑛1 )2 ( 2⁄𝑛2 )2 ⁄
√ 1+ 2 + 𝑛 −1 √𝑛
𝑛1 𝑛2 𝑛1 −1 2
2
∑𝑑 𝑛 ∑ 𝑑𝑖2 − (∑ 𝑑𝑖 )
𝑑̅ = 𝑖 and 𝑠𝑑 = √ , DF = n-1
𝑛 𝑛(𝑛−1)
 Quiz 2 [SET F]
Q-1: A fast-food chain is considering building a restaurant at a certain location. Based on financial
analysis, a site is acceptable only if the number of pedestrians passing the location averages more
than 100 per hour. In that case the chain is expected to realize a profit of 2 million dollars per year.
In case their decision is wrong, the chain is expected to suffer a loss of investment worth $200,000.
a) State the null and alternative hypotheses you will be using in this instance.
b) What is Type I error here and what are its financial consequences?
c) What is Type II error here and what are its financial consequences?
Q-2: Joan’s Nursery specializes in custom-designed landscaping for residential areas. The
estimated labor cost associated with a particular landscaping proposal is based on the number of
plantings of trees, shrubs, and so on to be used for the project. For cost estimating purposes,
managers use two hours of labor time for the planting of a medium-sized tree. Actual times from
a sample of 10 plantings during the past month follow (times in hours).
1.7 1.5 2.6 2.2 2.4 2.3 2.6 3.0 1.4 2.3
With a 0.05 level of significance, test to see whether the mean tree-planting time differs from 2
hours. [Note:∑ 𝑥 2 = 50.8]
Q-3: The manager of a web-based company that offer job placement services wanted to know
whether finance MBA majors were being offered higher salaries than marketing majors. In a
preliminary study, he randomly sampled 50 recently graduated MBAs, half of whom majored in
finance and half in marketing. From each he obtained the highest salary offers (including benefits).
These descriptive statistics are listed here. Can we infer that finance majors obtain higher salary
(in dollars) offers than do marketing majors? Use α = 0.05 and assume normality of salaries.
Finance: 𝑛1 = 25, ̅𝑥1 =65624, 𝑠1 = 18985.08
Marketing: 𝑛2 = 25, 𝑥̅2 =60423, 𝑠2 = 16193.47
2
𝑛 ∑ 𝑥 2 −(∑ 𝑥) ∑𝑥 𝑥̅ −𝜇0 𝑥̅ −𝜇0
𝑠=√ , 𝑥̅ = ,𝑧= 𝜎 , 𝑡 = 𝑠 , DF : n-1
𝑛(𝑛−1) 𝑛 ⁄ 𝑛 ⁄ 𝑛
√ √
(𝑛1 −1)𝑠12 +(𝑛2 −1)𝑠22 ̅̅̅̅
𝑋1 −𝑋̅̅̅̅
2 −(𝜇1 −𝜇2 )
𝑠𝑝 = √ ,𝑡= , DF: 𝑛1 + 𝑛2 − 2
𝑛1 +𝑛2 −2 1
𝑠𝑝 √𝑛 +𝑛
1
1 2
2
𝑠2
1 𝑠2
2
(𝑛 +𝑛 )
̅̅̅̅
𝑋1 −𝑋̅̅̅̅
2 −(𝜇1 −𝜇2 ) 1 2 𝑑̅ −(𝜇1 −𝜇2 )
𝑡= , 𝐷𝐹 ≅ 𝑠2 𝑠2
, Paired t test: t = 𝑠𝑑 ,
𝑠 2𝑠 2 ( 1⁄𝑛1 )2 ( 2⁄𝑛2 )2 ⁄
√ 1+ 2 + 𝑛 −1 √𝑛
𝑛1 𝑛2 𝑛1 −1 2
2
∑𝑑 𝑛 ∑ 𝑑𝑖2 − (∑ 𝑑𝑖 )
𝑑̅ = 𝑖 and 𝑠𝑑 = √ , DF = n-1
𝑛 𝑛(𝑛−1)