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Information Technology University

ECON 202
Quantitative Methods 2

PRACTICE FINAL EXAM SOLUTION

BSEDS 18

Spring 2019

Total Marks: 50

Total Time: 2 hours

Full Name: _________________________________________

Roll Number: _______________________________________

This exam consists of 7 pages of questions, a title page, a formula sheet and 1 page of probability
tables. Please read all the questions carefully. While it is preferred that you use the method
taught in class you may use any method to solve these questions. Show your work to get full
credit.
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Maximum Likelihood Method

Q1. A professional footballer takes 10 shots at a goal. He scores 6 times. Find the maximum
likelihood estimate p for scoring on a single penalty kick.
10
𝑃(𝐺𝑜𝑎𝑙𝑠 = 6) = 𝐶6 𝑝6 (1 − 𝑝)4
To find maximum we differentiate and equate to 0
𝑑𝑃
= 210 (6 𝑝5 (1 − 𝑝)4 + 𝑝6 4(1 − 𝑝)3 (−1) = 0
𝑑𝑝
6𝑝5 (1 − 𝑝)4 = 4𝑝6 (1 − 𝑝)3
6(1 − 𝑝) = 4𝑝
6 − 6𝑝 = 4𝑝
6 = 10𝑝
6
=𝑝
10

b) [2 marks] What is the probability that if there is a 0.5 chance to score on a penalty kick the
player will make 6 goals out of 10 shots
10
𝑃(𝐺𝑜𝑎𝑙𝑠 = 6) = 𝐶6 0.56 (1 − 0.5)4
= 210 × 0.510 = 0.205
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Bayesian Updating
Q: You have two types of dice in your pocket that each only have a six or a one:
• Type A dice have three sixes and three ones
• Type B dice have four sixes and two ones
You have 3 Type A dice and 2 Type B dice.
You randomly select a dice from your pocket and role it. The result is a one. What is the
probability that it is a:
a) Type A dice?
b) Type B dice?

a)
𝑃(𝐶 | 𝐴)
(𝐴|𝐶) = 𝑃(𝐴)
𝑃(𝐶)
𝑃(𝑂𝑛𝑒| 𝑇𝑦𝑝𝑒 𝐴)
𝑃(𝑇𝑦𝑝𝑒 𝐴|𝑂𝑛𝑒) = 𝑃(𝑇𝑦𝑝𝑒 𝐴)
𝑃(𝑂𝑛𝑒)
𝑃(𝑇𝑦𝑝𝑒 𝐴) = 0.6
3 3 2 2 9 + 4 13
𝑃(𝑂𝑛𝑒) = × + × = =
5 6 5 6 30 30
3
𝑃(𝑂𝑛𝑒| 𝑇𝑦𝑝𝑒 𝐴) =
6
3
3
𝑃(𝑇𝑦𝑝𝑒 𝐴|𝑂𝑛𝑒) = 6 × = 0.692
13 5
30
b)
2
𝑃(𝑂𝑛𝑒| 𝑇𝑦𝑝𝑒 𝐵) =
6
2
𝑃(𝑇𝑦𝑝𝑒 𝐵) =
5
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2
2
𝑃(𝑇𝑦𝑝𝑒 𝐵|𝑂𝑛𝑒) = 6 × = 0.308
13 5
30
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Statistics
Q: The Punjab Government wants to compare the Matric Mathematics teaching of two public
schools in Lahore. A sample of students from each school is selected and administered a
mathematics test. Following is the result:
School A School B

Mean 18 16

Standard Deviation 3.5 3.9

Number of students in sample 28 31

H0: the mean test scores of both schools is the same

HA: the mean test scores of both schools is different.
a) Calculate the T Value and find the corresponding range for the p value from the table
b) At a 95% confidence level what is your conclusion about the null hypothesis

𝜇𝐴 − 𝜇𝐵 18 − 16 2
𝑡 − 𝑣𝑎𝑙𝑢𝑒 = = = = 2.076
2 2 2 2 0.963
√𝑆𝐴 + 𝑆𝐵 √3.5 + 3.9
𝑛 𝑛 28 31
a)
Degrees of freedom is 28-1 = 27.
From the t table we can see for a t=2.076 and df = 27 p<0.05
b)
This is more significant than the 95% or 0.05 alpha level. Therefore, there is a difference in the
mean test scores of the two schools. We can reject the null hypothsis.
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Q. A farmer wants to compare the yield of two wheat fields. He takes samples from equal
sections of each . The weight of the wheat is shown below:

Yield in kg
Field A 20, 30, 30, 40, 30
Field B 10, 30, 20, 20, 10

Calculate the mean Yield for each field

Calculate the sample standard deviation for each field.
Is there a difference in the two wheat yield at a 95% level of significance?
20 + 30 + 30 + 40 + 30
𝜇𝐴 = = 30
5
10 + 30 + 20 + 20 + 10
𝜇𝐴 = = 18
5
1
𝑆𝐴 = √5−1 ∑𝑁 2
𝑖=1 (𝑥𝑖 − 30) =

1
√ [(20 − 30)2 + (30 − 30)2 + (30 − 30)2 + (40 − 30)2 + (30 − 30)2 ==
4

1 200
√ [100 + 0 + 0 + 100 + 0 = √ = √50
4 4

1
𝑆𝐴 = √5−1 ∑𝑁 2
𝑖=1 (𝑥𝑖 − 30) =

1
√ [(10 − 18)2 + (30 − 18)2 + (20 − 18)2 + (20 − 18)2 + (10 − 18)2 ==
4

1 280
√ [64 + 144 + 4 + 4 + 64 = √ = √70
4 4

𝜇𝑊𝑇 − 𝜇𝐾 30 − 18 12
𝑡 − 𝑣𝑎𝑙𝑢𝑒 = = = = 2.449
2 2 √24
√𝑆𝑊𝑇 + 𝑆𝐾 √50 + 70
𝑛 𝑛 5 5

Df= 5-1 = 4, t = 2.449 hence p<0.1. At a 95% confidence level or alpha of 0.05 this is not a
significant difference in the yields of the two wheat fields.
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Q. A sample of 500 men and 500 women were asked which holiday they preferred. The results
are presented below:
Beach Cruise
Men 209 291
Women 252 248
a) [6 marks] Calculate the 𝜒 2 statistic
For Expected values first sum the rows and colums
Beach Cruise Total
Men 209 291 500
Women 252 248 500
Total 461 539 1000
Expected value is (row sum x column sum)/total
Beach Cruise Total
Men 461x500/1000=230.5 539x500/1000=269.5 500
Women 461x500/1000= 230.5 539x500/1000=269.5 500
Total 461 539 1000

Observed 209 291 252 248

Expected 230.5 230.5 269.5 269.5
(O-E)2 (-21.5)2 (60.5)2 (-17.5)2 (21.5)2
(O-E)2/E 462.25/230.5 3660.25/230.5 306.25/269.5 462.25/230.5
2.005 15.880 1.136 2.005
𝜒 2 = 2.005 + 15.880 + 1.136 + 2.005 = 21.026
b) [2 mark] Based on this data and your statistical analysis is there a link between the gender of a
person and their holiday preference?
Df = (row -1) x (columns -1) = (2-1) x (2-1)= 1
With df of 1 and chi square statistic of 21.026 the p<0.001. We can conclude that there is a link
between the gender of a person and their holiday preference.
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Confidence Intervals [10 marks]

Q. A sample of size 𝑛 = 50 produced the sample mean of 𝑋̅ = 12. Assuming the population
standard deviation 𝜎 = 4, compute a 99% confidence interval for the population mean 𝜇.

𝜎
𝑥̅ ± 𝑧
√𝑛
With 99% z = 2.576
4
12 ± 2.576
√50
16 ± 1.457

What should the sample size be to have a confidence interval of ±0.1 at a confidence level of
99%?
4
2.576 = 0.1
√𝑛
4 2
(2.576 ) =𝑛
0.1
𝑛~10618
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Q7. In order to ensure efficient usage of a server, it is necessary to estimate the mean
number of concurrent users. According to records, the sample mean and sample standard
deviation of number of concurrent users at 12 randomly selected times is 37.7 and 8,
respectively. Construct a 95% confidence interval for the mean number of concurrent users.

n=12 so df = 12-1 = 11
at a 95% confidence level the t stat is 2.201

8
37.7 ± 2.201
√12
37.7 ± 5.1
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Formula Sheet
Sample Standard Deviation

𝑁
1
𝑆𝐴 = √ ∑ (𝑥𝑖 − 𝜇𝐴 )2
𝑁−1
𝑖=1

T Statistic
𝜇𝐴 − 𝜇𝐵
𝑡 − 𝑣𝑎𝑙𝑢𝑒 =
2 2
√𝑆𝐴 + 𝑆𝐵
𝑛 𝑛

Chi Square Statistic

(𝑂𝑖 − 𝐸𝑖 )2
𝜒2 = ∑
𝐸𝑖
𝑖

And 𝑑𝐹 = (𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑟𝑜𝑤𝑠 − 1) × (𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑐𝑜𝑙𝑢𝑚𝑛𝑠 − 1)

Z Interval
𝜎
𝑥̅ ± 𝑧
√𝑛
Where 𝜎 is the population standard deviation

T Interval
𝑠
𝑥̅ ± 𝑡
√𝑛
Where s is the sample standard deviation

Conditional Probability
𝑃(𝐶 | 𝐴)
𝑃(𝐴|𝐶) = 𝑃(𝐴)
𝑃(𝐶)

Binomial Distribution
𝑃(𝑋 = 𝑘) = 𝑛𝐶𝑘 𝑝𝑘 (1 − 𝑝)𝑛−𝑘
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T Value Table

Chi Square Value Table