QMETH 201, Homework 8

1) In a clinical trial, a random sample of 500 participants is used to test a new drug. Out
of these, 280 participants showed improvement. Test whether the population
proportion of improvement differs from 0.55 (let α=0.04).

a) State the null and alternative hypotheses associated with the test. (0.25 pt)
b) What is the critical value of the associated test statistic? (0.5 pt)
c) What is the calculated value of the associated test statistic? (0.25 pt)
d) What is the p-value of the associated test statistic? (0.25 pt)
e) State your decision about the null hypothesis by comparing the critical and calculated
values of the test statistic or by comparing the p-value with α. (0.25 pt)

2) The average duration of customer support calls at QuickHelp Call Center has been 12
minutes. Due to recent changes in their call handling procedures, the company's
management believes the mean call duration has increased significantly. To evaluate
this belief, a random sample of 41 calls is analyzed. The sample data shows an
average call duration of 12.8 minutes, with a standard deviation of 1.9 minutes. Test
the management's belief at the 0.05 level of significance.

a) State the null and alternative hypotheses associated with the test. (0.25 pt)
b) What is the calculated value of the associated test statistic? (0.5 pt)
c) What is the critical value of the associated test statistic? (0.25 pt)
d) State your decision about the null hypothesis by comparing the calculated and critical
values of the test statistic. (0.25 pt)
e) What is the p-value of the associated test statistic? State your decision about the null
hypothesis by comparing the p-value and the level of significance. (0.25 pt)
f) State your conclusion based on the decision about the null hypothesis. (0.25 pt)
QMETH 201, Homework 8

3) The following matrix displays the bivariate correlations between various quantitative
variables for city apartments:
LIVING
n= 450 KITCHENS ROOMS AREA AGE VALUE
KITCHENS 1
LIVING ROOMS 0.45 1
AREA 0.5 0.55 1
AGE -0.35 -0.2 -0.1 1
VALUE 0.56 0.42 0.69 -0.15 1

KITCHENS: number of kitchens in the apartment

LIVING_ROOMS: number of living rooms in the apartment
AREA: total area of the apartment in square meters
AGE: age of the apartment, in years, when sold
VALUE: selling price of the apartment

Use the above correlation matrix to answer Parts a) through d): (Each correct answer: 0.25 pt)

a) On average, older apartments sell for LOWER HIGHER (CIRCLE one)

prices than newer apartments.
b) On average, older apartments are SMALLER LARGER (CIRCLE one) than
newer apartments.
c) The correlation between KITCHENS and AGE is WEAKER STRONGER
(CIRCLE one) than the correlation between LIVING_ROOMS and VALUE.
d) The correlation between AGE and AREA is WEAKER STRONGER
(CIRCLE one) than the correlation between AGE and VALUE.

4) Using the correlation matrix from a previous problem, test whether the population
correlation between AREA and LIVING_ROOMS in city apartments is
significantly greater than zero:

a) State the null and alternative hypotheses associated with the test. (0.5 pt)
b) Determine the calculated value for the associated test statistic. (0.5 pt)
c) Given an alpha (α) level of 0.05, determine the critical value for the associated test
statistic. (0.25 pt)
d) Conclude whether the population correlation coefficient between AREA and
LIVING_ROOMS is significantly greater than zero. (0.5 pt)

In the correlation matrix, the correlation between AREA and LIVING_ROOMS is

0.550, and the sample size is 450. Use this information to answer the questions.
QMETH 201, Homework 8

5) The data file seattle_houses contains observations for 497 family home sales in
Seattle, from March 10th, 2017 to April 8th, 2017 (source Redfin.com). Use the MS
Excel output below, based on a simple regression analysis with PRICE (selling price, in
$) as the response variable and SQFT (number of [livable] square feet in the house) as
the explanatory variable, to answer/complete Parts a) through m)

a) Write the estimated regression equation. (SHOW WORK; 0.25 pt)

b) What percent of the total variation in PRICE does the regression equation, or
SQFT, explain or determine? (0.25 point)

c) What is the value of the bivariate correlation coefficient between PRICE and SQFT
in the sample? (0.25 point)

d) Interpret the value for the Standard Error under Regression Statistics in this context
(please be specific). (0.25 point)

e) Interpret the value for the estimated slope coefficient for SQFT (i.e., Size) in this
situation or context (please be specific) (0.25 point)

f) Interpret the value for the estimated intercept coefficient in this situation. Should we
give any importance to the intercept interpretation? (0.5 point)

g) State the hypotheses for assessing the statistical significance of the overall
regression equation. (0.25 point)
QMETH 201, Homework 8

h) Does the model overall fit the data? Use (α = 0.05) (0.25 point)

YES NO (CIRCLE one)

i) State the null and the alternative hypotheses to test whether the slope coefficient for
SQFT is significantly greater than zero. (SHOW WORK; 0.5 pt)

j) If 𝛼 = 0.01, determine the critical value for the test statistic associated with the
hypotheses in Part i). (Hint: Note that df = n-p-1) (0.25 point)

k) Given the MS Excel output and Part j), state your decision regarding the null
hypotheses. (SHOW WORK; 0.25 pt)

l) You are a realtor in Seattle. On average, do smaller single-family homes have

significantly LOWER or HIGHER selling prices than larger single-family homes?
(CIRCLE ONE; 0.25 point)

m) If the SQFT for house A equaled 1250 ft2 and the SQFT for the house B equaled
1550 ft2, by how much (in $s) do you expect the prices of the two houses to differ?
(Show work; 0.5 point)