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durham_student_coaching.ppt
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Durham Industries, Inc.
Student Coaching Slides

5.unknown

Question 1A & 1B:
Histogram

  • See Gateway web site for Excel steps
  • Use tools/data analysis/histogram
  • What proportion of Eastasia citizens have disposable incomes > $1000 per month? Approximate answer is ok here.

Question 1C:
Sample statistics

  • See web site for Excel steps
  • Use tools/data analysis/descriptive statistics/summary statistics
  • Mean: first line
  • Standard deviation: fifth line

Question 1D:
Hypothesis Testing

  • Step 1: Ho: Null hypothesis = Eastasia’s claim
  • Step 2: H1 or Ha: Alternative hypothesis = Oceana’s claim

(a) If Oceana wins the debate only when the population mean is less than $1000, H1 should be one-tail

(b) Otherwise, H1 should be two-tail

Hypothesis Testing (continued)

  • Step 3: Critical Value

(a) Determine which statistical table to use

(b) If H1 is one-tail, put .05 in tail; if H1 is 2-tail, put .025 in each tail

  • Step 4: Test Statistic = Sample Statistic

(a) Use sample mean and standard deviation from Question 1c

(b) Use standard error of the mean

Hypothesis Testing (continued)

  • Step 5: Conclusion

(a) If sample statistic (absolute value) exceeds critical value, reject Ho

(b) Otherwise, do not reject Ho

Question 2A:
Income Variation

  • Standard deviation measures variation
  • If standard deviation = 0, no variation, so each person has same income
  • High standard deviation implies high variation

Question 2B:
Poverty Level

  • Use Z table (normal area table)
  • Use standard deviation, NOT standard error since this is not a sampling distribution problem
  • Question 2B has 2 calculations, one for Eastasia and the other for Oceana

Question 2B:
Skewed Distribution

  • If mean > median, distribution is skewed
  • Do you think mean > median for income?
  • Use normal table only if distribution is bell shaped
  • Bell shaped only if symmetric
  • Symmetric only if not skewed

Question 3:
Hypothesis Testing

  • Ho: Population proportion = 1/3 (Amnesty International‘s claim)
  • Normal approximation to binomial
  • H1 is one-tail if Minister of Commerce wins debate only when proportion is less than 1/3. Otherwise, it is two-tail
  • Sample proportion = number of political prisoners/sample size

Questions 4 and 5:
Factors Determining GDP/Capita

  • Physical Capital
  • Human Capital
  • Level of Technology
  • Efficiency

Question 5:
Ethical Considerations

  • Who benefits and who loses from the firm’s decision?
  • Who does the firm have a responsibility to?
  • What are those responsibilities?