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Exercie Hyp Testing

1. A sample of 30 stocks in 2006 had an average P/E ratio of 11.77. Using a 5% significance level, determine if the P/E ratio has changed from the 1990-2005 average of 14.35 with a standard deviation of 9.73. 2. A sample of 20 light bulbs had an average output of 952 lumens with a standard deviation of 18.4 lumens. Using a 0.01 significance level, determine if the true average output of 960 lumens. 3. Using a 5% significance level, determine if a brand of washing machine with a sample mean life of 2450 hours and standard deviation of 1600 hours is more reliable than the expected life

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62 views1 page

Exercie Hyp Testing

1. A sample of 30 stocks in 2006 had an average P/E ratio of 11.77. Using a 5% significance level, determine if the P/E ratio has changed from the 1990-2005 average of 14.35 with a standard deviation of 9.73. 2. A sample of 20 light bulbs had an average output of 952 lumens with a standard deviation of 18.4 lumens. Using a 0.01 significance level, determine if the true average output of 960 lumens. 3. Using a 5% significance level, determine if a brand of washing machine with a sample mean life of 2450 hours and standard deviation of 1600 hours is more reliable than the expected life

Uploaded by

Rajat Jadhav
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Exercise- Testing of Hypothesis

1. The P/E ratio of stocks on the NYSE between 1990 and 2005 was 14.35 and the standard
deviation was 9.73. A sample of 30 randomly chosen stocks in 2006 gave an average P/E
ratio of 11.77. At a 5% significance level, would you say that the P/E ratio has changed in
2006?
2. An electric company has developed a new bulb, whose design specification is 960 lumens of
light output. The standard deviation of light output is 18.4 lumens. From a sample of 20
bulbs, the testing committee found an average light output of 952 lumens. At a .01
significance level, is the new model producing an average output of 960 lumens?
3. Electric motors for washing machines are known to have an expected life of 2000 hours of
use. If a sample of 100 motors a particular brand shows a mean life of 2450 hours with a
standard deviation of 1600 hours, can we conclude at a 5% significance level that this brand is
more reliable?
4. A hot chocolate manufacturer is concerned about the effect of a year- long coffee advertising
campaign on hot chocolate sales. The average hot chocolate sales before the start of the coffee
campaign was 984.7 pounds per week, and the standard deviation was 72.6 pounds. A sample
of 30 weeks after the commencement of the coffee campaign showed average sales of 912.1
pounds. At a significance level of 1%, would you say that the coffee campaign has adversely
affected hot chocolate sales?
5. A soft drink bottling company is alleged to underfill its bottles. Inspectors, on taking a sample
of 200 bottles, found the average fill to 31.7 ounces with a standard deviation of 1.5 ounces. If
the bottles are advertised to contain 32 ounces, should the inspectors conclude that the bottles
are under- filled on an average? Use alpha= .05
6. A company was recently criticized in the press for not paying women as much as men for
similar jobs. A random sample of 29 women employees was taken and their average salary
was found to be USD 22500. If the average of all employees for similar jobs is USD 23500,
with a standard deviation of USD 1250, determine at a significance level of 5%, whether the
criticism is justified.
7. A sample of 20 women was taken from 500 women enrolled in a weight loss program run by
a health spa. They were found to have a mean diastolic blood pressure of 101, with a standard
deviation of 42. At a significance level of 1%, do women enrolled in the weight loss program
have an average diastolic pressure higher than 75, which is the diastolic pressure of normal
women?
8. A documentary on over- eating claimed that Americans are 16 pounds over-weight on an
average. To test this claim, 9 randomly chosen individuals were examined and their average
excess weight was found to be 18 pounds with a standard deviation of 4 pounds. At a
significance level of .01, is there reason to accept the claim of 16 pounds?
9. A sample of 350 loans given by a microfinance company showed that 136 were given to
women. A complete census of loans two years ago showed that 41% of the borrowers were
women. At a significance level of 5%, can you conclude that the proportion of loans given to
women has changed significantly in two years?
10. The Postal Department has initiated new procedures to address the problem of lost mail.
These procedures were expected to reduce the percentage of lost mail to below the historic
loss rate of .3%. Two months after implementing the procedures, a sample of 8000 mails was
taken and 18 of them were found not to reach their destinations. At a significance level of 1%,
can the Postal Dept conclude the new procedures were effective?
11. In problem 2, compute the power of the test for true mean= (i) 955 (ii) 952.

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