QA- PAPER -I

Marks: 70 Time: 2.50 Hours

Q-1 Explain the following:

(a) What is sampling distribution? Define standard error of mean in sampling.

Also write statement of central limit theorem. And write advantages of [07]
sampling.
(b) Write a brief note on Testing of hypothesis and discuss Type-I and Type -II
errors with examples. [07]

Q-2 Answer the following:

(a) The administrator of SAL hospital surveyed the number of days 200
randomly chosen patients in the hospital following an operation. Calculate
Mean, SD and mode for the data given below. If the distribution is roughly [07]
bell shaped, how many stays can we expect between 0 to 17 days? And what
percentage of stays would you expect if the distribution is non symmetric for
the same range?

Hospital stay in days Observed Frequencies

1-3 18
4-6 90
7-9 44
10-12 21
13-15 9
16-18 9
19-21 4
22-24 5

(b) A telephone survey conducted by the maritz marketing research

company found that 43% of Americans expect to save money next
year than they saved last year. Forty five percent of those surveyed
plan to reduce debt next year. Of those who expect to save more [07]
money next year, 81% plan to reduce debt next year. An American
is selected randomly.
a. What is the probability that this person to expects to save more
money next year and plans to reduce debt next year?
b. What is the probability that this person expects to save more
money next year or plans to reduce debt next year?
c. What is the probability that this person neither expects to save
more money next year nor plans to reduce debt next year?
d. What is the probability that this person expects to save more
money next year and does not plan to reduce debt next year?

OR
 (b) The manager of a small postal substation is trying to quantify the variation in
the weekly demand for mailing tubes. She has seceded to assume that the
demand is normally distributed. She knows that on an average 100 tubes are [07]
purchased weekly and that 90% of the time, weekly demand is below 115.
a) What is the standard deviation of this distribution?
b) The manager wants to stock enough mailing tubes each week so that
the probability of running out of tubes is no higher than 0.05. What
is the lowest stock level?

Q-3 Answer the following:

(a) To see whether silicon chip sales are independent of where the U.S. economy
is in the business cycle, data have been collected on the weekly sales of
zippy chippy, a silicon valley firm, and on whether the U.S. economy was [07]
rising to a cycle peak, at a cycle peak, falling to a cycle trough, or at a cycle
trough. The results are:
WEEKLY SALES
Economy High Medium Low Total
At Peak 20 7 3 30
At trough 30 40 30 100
Rising 20 8 2 30
Falling 30 5 5 40
Total 100 60 40 200

a) Calculate a table of observed and expected frequencies for this

problem.
b) State the null and alternative hypotheses.
c) Calculate chi-square statistics.
d) At the 0.10 significance level, what is your conclusion?

(b) The average cost per square foot for office rental space in the central
[07]
business district of Philadelphia is 23.58, according to Cushman. A large real
estate company wants to confirm this figure. The firm conducts the
telephonic survey of 95 offices in the central business district of Philadelphia
and asks the office managers how much they pay in rent per square foot.
Suppose the sample average is 22.83 per square foot, with a SD of 5.11.
a) Conduct a hypothesis test using Alpha = 0.05 to determine whether
the cost per square foot reported by Cushman should be rejected?
b) If in the decision in part (a) is fail to reject and if the actual cost per
square foot is 22.30, what is the probability of committing type II
error?
OR
(a) An important proposal must be voted on, and a politician wants to find the
proportion of people who are in favor of the proposal. Find the sample size
needed to estimate the true proportion to within +.05 at the 95% confidence [07]
level. Assume you have no strong feelings about what the proportion is. How
would your sample size change if you believe about 75% of the people favor
the proposal? How would it change if only about 25% of the people favor the
proposal?
 (b) Data of Sales generated through four different training methods are as
follows: test the effectiveness of all four methods at 5% level of significance
and draw the conclusion. [07]

Method 1 Method 2 Method 3 Method 4

45 48 43 41
49 51 45 44
46 45 47 47
50 41 49 50
42 44 51 53

Q-4 Answer the following:

(a) A survey of CPAs across the US found that the average net income for sole
proprietor CPAs is $74, 914. Because this survey is now more than seven
years old, an accounting researcher wants to test this figure by taking a [07]
random sample of 112 sole proprietor accountants in the US with average net
income $78, 695 to determine whether the net income figure changed.
Assume the population standard deviation of net incomes for sole proprietor
CPAs is $14, 530 and 0.05 level of significance?

(b) For the following find the best fitting line. Also find co-efficient of
determination, 95% CI for expenditure when income is 20,000.
Income Expenditure [07]
25K 18000
29K 22000
35K 24500
42K 28000
22K 16500
18K 14000
12K 9600
OR
(a) ABC, a multinational manufacturer, uses a batch process to produce widgets.
Each batch of widgets takes 8 hours to produce and has material and labor
costs of $8476. Because of variations in machine efficiency and raw material [07]
purity, the number of widgets per batch is random. All widgets made can be
sold for $ 2.50 each, and widget production is profitable so long as the
batches sell for more than $12,500 on average. ABC sampled 16 batches and
found 5040 widgets per batch on average, with a standard deviation of 41.3
widgets. At level of significance 0.025, can ABC conclude that its widget
operation is profitable?

(b) Write a detailed note on Multicolinearity and steps to overcome the same. [07]
 Q-5 Answer the following:
(a) For the following data calculate Laspeyers and Pasches index Numbers by
taking 1990 as a base period.

Selling Price [07]

1990 1991 1992
23 26 24
31 35 32
27 29 26
21 28 27
18 25 27
(b) Some oil speculators are interested in drilling an oil well. The rights to
the land have been secured and they must decide whether to drill. The [07]
states of nature are that oil is present or that no oil is present. Their
two decision alternatives are drill or don’t drill. If they strike oil, the
well will pay $1 million. If they have a dry hole, they will lose
$100,000. If they don’t drill, their payoffs are $0 when oil is present
and $0 when it is not. The probability that oil is present is .11. Use this
information to construct a decision table and compute an expected
monetary value for this problem.
OR
(a) For Alpha = 0.4 find MSE using Exponential Smoothing and 4-
Moving averages methods for the following data and compare both the [07]
answers.

Year Housing Units

1984 1750
1985 1742
1986 1805
1987 1620
1988 1488
1989 1376
1990 1193
1991 1014
1992 1200
1993 1288
1994 1457
1995 1354
1996 1477
1997 1474
1998 1617
1999 1666
(b) Write a short note on Different type of data measurement and its
characteristic. [07]
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