END-OF-SEMESTER EXAMINATION

SEMESTER 1, 2015/2016 SESSION

KULLIYYAH OF ECONOMICS AND MANAGEMENT SCIENCES
Programme

ENM/B.ECONS/BBA/BACC

Level of Study : 1

Time

2.30 p.m. 5.30 p.m.

Date

: 14/01/2016

Duration

3 Hr.(s) 0 Min(s)

Course Code

ECON 1140

Section(s)

Course Title

Statistical Methods

1-7

(This Question Paper Consists of 6 Printed Pages)

INSTRUCTION (S) TO CANDIDATES

DO NOT OPEN UNTIL YOU ARE ASKED TO DO SO
Answer Only FIVE (5) Questions Out of SEVEN (7) Questions.
ANY FORM OF CHEATING OR ATTEMPT TO CHEAT IS A SERIOUS
OFFENCE WHICH MAY LEAD TO DISMISSAL

APPROVED BY:

QUESTION 1
a. True or false.
i. Data obtained from a nominal scale can be either numeric or non-numeric.
ii. In a post office, the mailboxes are numbered from 1 to 4,500. These numbers
represent quantitative data.
iii. Gender is an example of an ordinal scale.
iv. Standard deviation is affected by outliers.
v. Parameters and statistics describe the sample and the population, respectively.
(5 marks)
b. Suppose an industry index for Home Furnishing and Fixtures in year 2010 is
187.9. If the index has a base period of 1995, what does this figure indicate?
(2 marks)
c. According to The Centres for Disease Control of Country Wikiwiki, about 1 in 88
children have been diagnosed with leukemia. Suppose you consider a group of 10
children.
i. State the random variable
(1 mark)
ii. Find the probability that:
I) all children have leukemia
(3 marks)
II) at most two children have leukemia
(3 marks)
III) seven children have no leukemia.
(3 marks)
iii. Find the mean number of the leukemia children.
(1 marks)
iv. Find the standard deviation.
(2 marks)
QUESTION 2
a. The 2015 Census of Country A found that the chance of a household being a
certain size. The data is in the table below.
Size of
household
(number
of people
per house)
Probability

26.7%

33.6%

15.8%

13.7%

6.3%

2.4%

1.4%

i. State the random variable

(1 mark)
ii. Find the probability that a household has less than six people
(2 marks)
iii. Is it unusual for a household to have six people in the family? Justify your
answer.
(2 marks)
iv. Find the mean and standard deviation for the household size.
(3 marks)

b. General Hospital's patient account division has compiled data on the age of
accounts receivables. The data collected indicate that the age of the accounts
follow a normal distribution with mean 28 days and standard deviation 8 days.
i. What proportion of the accounts is between 20 and 40 days old?
ii. What proportion of the accounts are less than 30 days old?
iii. What is the number of days in which 75% of all accounts are above?

(3 marks)
(3 marks)
(3 marks)

c. Of 369 randomly selected medical students, 23 said that they planned to work in a
rural community. Construct a 95% confidence interval for the percentage of all
medical students who plan to work in a rural community.
(3 marks)
QUESTION 3
a. You wish to estimate the mean weight of machine components of a certain type
and you require a 92% degree of confidence that the sample mean will be in error
by no more than 0.008g. A pilot study showed that the population standard
deviation is estimated to be 0.09g. Find the sample size required.
(3 marks)
b. A manufacturer of wire notes that, on average, there are 4 flaws per 10 rods of
wire. Each day one rod of wire is inspected for flaws. If more than one flaw is
found in this rod, the plant shuts down for repairs. Suppose, nothing at all is
wrong with the machinery on a certain day.
i. What probability distribution is most suitable in this case?

(1 mark)

ii. What is the probability that the plant will be closed for repairs after an
inspection on this day?
(4 marks)
c. Douglas wants to compare the yield of income and growth mutual funds. Fifty
thousand dollars is invested in each of a sample of 35 income and 40 growth
funds. The mean increase for a two-year period for the income funds is $900. For
the growth funds, the mean increase is $875. Income funds have a sample
standard deviation of $35; growth funds have a sample standard deviation of $45.
i. What assumption, regarding population standard deviation, do you need to
make before hypothesis testing? State the assumption and justify it.
(2 marks)
ii. At the 0.05 significance level, is there a difference in the mean yields of the
two funds? Make sure to show the steps of hypothesis testing.
(8 marks)
iii. What is the -value? Interpret it.
(2 marks)
3

QUESTION 4
a. The average outstanding credit card balance for young couples in Country Z is
normally distributed with mean $650 and standard deviation of $420.
i. What is the probability that a couple chosen at random has a credit card
balance exceeding $700?
(3 marks)
ii. What is the probability that a random sample of 100 young couples have a
mean credit card balance exceeding $700?
(3 marks)
iii. What is the probability that a random sample of 200 young couples have a
credit card balance totaling less than $125,000?
(3 marks)
iv. The probability that 50 randomly chosen young couples have an average credit
card balance greater than a certain average is 0.29. What is the average
amount?
(4 marks)
v. The probability that 100 randomly chosen young couples have a total credit
card balance less than a certain total is 0.42. What is the total amount?
(4 marks)
b. For two sample tests of hypothesis, there are at least three approaches such as the
-test, pooled -test and dependent sample -test. Write down one characteristic or
condition to recognize each type of test.
(3 marks)
QUESTION 5
a. The average amount of time that people spend going through airport security for
planes at a busy airport is normally distributed with mean 21 minutes and a
standard deviation of 4.2 minutes.
i. What is the probability that a person has to wait more than 25 minutes?
(3 marks)
ii. What is the probability that the total wait time for 50 people is less than 1080
minutes?
(3 marks)
iii. The probability that 30 randomly chosen people have an average wait time
longer than a certain average is 0.27. What is the average value?
(4 marks)

b. An organization studying employer-employee relations proposed that each

employee would rate his or her immediate supervisor and in turn the supervisor
would rate each employee. To find reactions regarding the proposal, 150 office
personnel and 200 plant personnel were selected at random. Ninety-eight of the
office personnel and 113 of the plant personnel were in favor of the proposal.
i. At the 0.05 level of significance, test the hypothesis that the population
proportions are equal. (Show the complete steps of hypothesis testing)
(8 marks)

ii. Find the -value and interpret it.

(2 marks)

QUESTION 6

a. The Babana state hospital has been renovated recently with the expectation that
with the renovation the mean number of patients to be attended will be more than
25. A random sample of 16 days revealed the following number of patients:
27

25

24

25

27

24

25

26

25

28

28

25

27

26

29

25

i. At the 0.01 level of significance, can we conclude that the claim of Babana
hospital authority is true? Show the procedures of hypothesis testing.
(8 marks)
ii. Estimate the -value and interpret it.

(2 marks)

b. Random samples of individuals from three different mahallah (colleges) of IIUM

were asked how much time they spend per day studying or doing work related to
academic matters. The results (in minutes) for the three mahallah are shown
below.
Mahallah I
260
280
240
260
300

Mahallah II
178
190
220
240

Mahallah III
211
190
250

i. A partial of ANOVA table follows. Complete the missing entries (?) in this
table.
(4 marks)
Source of Variation
Treatment
Error
Total

Sum of Squares
9,552.92
?
15,874.92

df
?
?
?

Mean Square
?
?

F
?

ii. At 95% confidence, test to see if there is a significant difference in the

averages of the three groups.
(6 marks)
QUESTION 7
a. The test scores for selected samples of KENMS students who took the statistics
course from three different instructors are shown below.
Instructor A
83
60
80
85
71

Instructor B
90
55
84
91
85

Instructor C
85
90
90
95
80

i. Given that the sum of squares treatment (SST) = 374.8 and the sum of squares
error (SSE) = 1,438.8, compute the mean square treatment (MST), mean
square error (MSE) and -value.
(5 marks)
ii. At = 0.05, test to see if there is a significant difference among the averages
of the three groups.
(5 marks)
b. A survey by Khazanah Research Institute investigated the publics attitude
towards the federal deficit. Each sampled person was classified as to whether they
felt the government should reduce the deficit, increase the deficit, or if they had
no opinion. The sample results of the study by gender are reported below.
Gender
Female
Male

Reduce the deficit

244
305

Increase the deficit

194
114

No opinion
68
25

At the 0.05 significance level, is it reasonable to conclude that gender is

independent of a persons position on the deficit? Conduct the complete steps in
hypothesis testing in arriving to the conclusion.
(10 marks)