Group Assignment No.

Inferential Statistics- Hypothesis Testing for two populations

Max. Marks: 50

All the questions are compulsory. The weightage of each question has been mentioned next

to it.

Note:

1. Please do not repeat the text of questions in your response sheets.

2. There must be only a single submission per group.

3. Use the following format to name your files before submitting: Group<No.>.

Example, members of group no. 5 will name their files as: Group5. (No Spacing)

Q1. The Trade Show Bureau conducted a survey to determine why people go to trade shows.

The respondents were asked to rate a series of reasons on a scale from 1 to 5, with 1

representing little importance and 5 representing great importance. One of the reasons

suggested was general curiosity. The following responses for 50 people from the

computers/electronics industry and 50 people from the food/beverage industry were recorded

for general curiosity. Use these data and significance level of 0.01 to determine whether there

is a significant difference between people in these two industries on this question. Assume

the variance for the computer/electronics population is 1.0188 and the variance for the

food/beverage population is 0.9180.

Computers/Electronic Food/Beverages
1 2 1 3 2 3 3 2 4 3
0 3 3 2 1 4 5 2 4 3
3 3 1 2 2 3 2 3 2 3
3 2 2 2 2 4 3 3 3 3
1 2 3 2 1 2 4 2 3 3
1 1 3 3 2 2 4 4 4 4
 2 1 4 1 4 3 5 3 3 2
2 3 0 1 0 2 0 2 2 5
3 3 2 2 3 4 3 3 2 3
2 1 0 2 3 4 3 3 3 2

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Q2. The Bureau of Labor Statistics shows that the average insurance cost to a company per

employee per hour is $1.84 for managers and $1.99 for professional specialty workers.

Suppose these figures were obtained from 14 managers and 15 professional specialty workers

and that their respective population standard deviations are $0.38 and $0.51. Assume that

such insurance costs are normally distributed in the population.

a. Calculate a 98% confidence interval to estimate the difference in the mean hourly

company expenditures for insurance for these two groups. What is the value of the point

estimate?

b. Test to determine whether there is a significant difference in the hourly rates employers

pay for insurance between managers and professional specialty workers. Use a 2% level of

significance.

[2.5+2.5=5]

Q3 a. Suppose you want to determine whether the average values for populations 1 and

2 are different, and you randomly gather the following data.

Sample 1 Sample 2
2 10 7 8 2 5 10 12 8 7 9 11
9 1 8 0 2 8 9 8 9 10 11 10
11 2 4 5 3 9 11 10 7 8 10 10

Test your conjecture, using a probability of committing a Type I error of .01. Assume the

population variances are the same and x is normally distributed in the populations.

b. Use these data to construct a 98% confidence interval for the difference in the two

population means.
 [2.5+2.5=5]

Q4. Suppose a Realtor is interested in comparing the asking prices of midrange homes in

Peoria, Illinois, and Evansville, Indiana. The Realtor conducts a small telephone survey in the

two cities, asking the prices of midrange homes. A random sample of 21 listings in Peoria

resulted in a sample average price of $116,900, with a standard deviation of $2,300. A

random sample of 26 listings in Evansville resulted in a sample average price of $114,000,

with a standard deviation of $1,750. The Realtor assumes prices of midrange homes are

normally distributed and the variance in prices in the two cities is about the same.

a. What would he obtain for a 90% confidence interval for the difference in mean prices of

midrange homes between Peoria and Evansville?

b. Test whether there is any difference in the mean prices of midrange homes of the two

cities for significance level of 0.10.

[2.5+2.5=5]

Q5. Because of uncertainty in real estate markets, many homeowners are considering

remodeling and constructing additions rather than selling. Probably the most expensive room

in the house to remodel is the kitchen, with an average cost of about $23,400. In terms of

resale value, is remodeling the kitchen worth the cost? The following cost and resale figures

are published by Remodeling magazine for 11 cities. Use these data to construct a 99%

confidence interval for the difference between cost and added resale value of kitchen

remodeling. Assume the differences are normally distributed in the population.

City Cost ($) Resale ($)

Atlanta 20427 25163
Boston 27255 24625
Des Moines 22115 12600
Kansas City, 23256 24588
MO
Louisville 21887 19267
Portland, OR 24255 20150
Raleigh-
Durham 19852 22500
Reno 23624 16667
Ridgewood, NJ 25885 26875
San Francisco 28999 35333
Tulsa 20836 16292
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Q6. The vice president of marketing brought to the attention of sales managers that most of

the company’s manufacturer representatives contacted clients and maintained client

relationships in a disorganized, haphazard way. The sales managers brought the reps in for a

three-day seminar and training session on how to use an organizer to schedule visits and

recall pertinent information about each client more effectively. Sales reps were taught how to

schedule visits most efficiently to maximize their efforts. Sales managers were given data on

the number of site visits by sales reps on a randomly selected day both before and after the

seminar. Use the following data to test whether significantly more site visits were made after

the seminar. Use significance level of 0.05. Assume the differences in the number of site

visits are normally distributed.

Rep Before After

1 2 4
2 4 5
3 1 3
4 3 3
5 4 3
6 2 5
7 2 6
8 3 4
9 1 5

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Q7. Companies that recently developed new products were asked to rate which activities are

most difficult to accomplish with new products. Options included such activities as assessing

market potential, market testing, finalizing the design, developing a business plan, and the

like. A researcher wants to conduct a similar study to compare the results between two

industries: the computer hardware industry and the banking industry. He takes a random

sample of 56 computer firms and 89 banks. The researcher asks whether market testing is the

most difficult activity to accomplish in developing a new product. Some 48% of the sampled

computer companies and 56% of the sampled banks respond that it is the most difficult

activity. Use a level of significance of .20 to test whether there is a significant difference in

the responses to the question from these two industries.

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Q8. A large production facility uses two machines to produce a key part for its main product.

Inspectors have expressed concern about the quality of the finished product. Quality control

investigation has revealed that the key part made by the two machines is defective at times.

The inspectors randomly sampled 35 units of the key part from each machine. Of those

produced by machine A, five were defective. Seven of the 35 sampled parts from machine B

were defective. The production manager is interested in estimating the difference in

proportions of the populations of parts that are defective between machine A and machine B.

From the sample information, compute a 98% confidence interval for this difference.

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Q9. How long are resale houses on the market? One survey by the Houston Association of

Realtors reported that in Houston, resale houses are on the market an average of 112 days. Of

course, the length of time varies by market. Suppose random samples of 13 houses in
Houston and 11 houses in Chicago that are for resale are traced. The data shown here

represent the number of days each house was on the market before being sold. Use the given

data and a 1% level of significance to determine whether the population variances for the

number of days until resale are different in Houston than in Chicago. Assume the numbers of

days resale houses are on the market are normally distributed.

Houston Chicago
132 126 118 56
138 94 85 69
131 161 113 67
127 133 81 54
99 199 94 137
126 88 93
134

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Q10. One recent study showed that the average annual amount spent by an East Coast

household on frankfurters was $23.84 compared with an average of $19.83 for West Coast

households. Suppose a random sample of 11 East Coast households showed that the standard

deviation of these purchases (frankfurters) was $7.52, whereas a random sample of 15 West

Coast households resulted in a standard deviation of $6.08. Do these samples provide enough

evidence to conclude that the variance of annual frankfurter purchases for East Coast

households is greater than the variance of annual frankfurter purchases for West Coast

households? Let alpha be .05. Assume amounts spent per year on frankfurters are normally

distributed. Suppose the data did show that the variance among East Coast households is

greater than that among West Coast households. What might this variance mean to decision

makers in the frankfurter industry?

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