Topic 7: Inference for the Proportion Exercises

Q1
The following data represent the responses (Y for yes and N for no) from a sample of 40
college students to the question “Do you currently own shares in any stocks?”

N N Y N N Y N N N Y N N Y N N Y N N N Y
N N N N N N N N N N Y N N N Y N N N N N

a) Find the sample proportion of college students who own shares.

b) Find the standard error of the sample proportion of college students who own shares.

Q2
You plan to conduct a marketing experiment in which students are to taste one of two
different brands of soft drink. Their task is to correctly identify the brand tasted. You select a
random sample of 200 students and assume that the students have no ability to distinguish
between the two brands. (Hint: If an individual has no ability to distinguish between the two
soft drinks, then each brand is equally likely to be selected.)

a) What is the probability that the sample will have between 50% and 60% of the
identifications correct?
b) The probability is 90% that the sample percentage is contained within what symmetrical
limits of the population percentage?
c) What is the probability that the sample percentage of correct identifications is greater
than 65%?
d) Which is more likely to occur – more than 60% correct identifications in the sample of
200 or more than 55% correct identifications in a sample of 1,000? Explain.

Q3
In a survey conducted for American Express, 27% of small business owners indicated that
they never check in with the office when on vacation. The sample size used in the study was
not disclosed.

a) Suppose that the survey was based on 500 small business owners. Construct a 95%
confidence interval estimate for the population proportion of small business owners
who never check in with the office when on vacation.
b) Suppose that the survey was based on 1,000 small business owners. Construct a 95%
confidence interval estimate for the population proportion of small business owners
who never check in with the office when on vacation.
c) Discuss the effect of sample size on the confidence interval estimate.
Q4
A study of 658 CEOs conducted by the Conference Board reported that 250 stated that their
company’s greatest concern was sustained and steady top-line growth.

a) Construct a 95% confidence interval for the proportion of CEOs whose greatest concern
was sustained and steady top-line growth.
b) To conduct a follow-up study to estimate the population proportion of CEOs whose
greatest concern was sustained and steady top-line growth to within  0.01 with 95%
confidence, how many CEOs would you survey?

Q5
A bank recently has conducted a survey to explore differences in banking behavior between
customers with e-banking account and customer without e-banking account. Suppose the
survey was based on 200 respondents who have e-banking account and 400 respondents who
don’t have e-banking account. The numbers of respondents who visited the bank in person
last month are as follows:
a)
Service With e-banking account Without e-banking account
Visited the bank in Yes 102 288
person last month No 98 112
Total 200 400

Suppose the management of the bank plans to conduct another survey. What sample size is
needed to estimate the population proportion of customers without e-banking account that
visited the bank in person last month to within ±0.03 with 95% confidence? What sample size
is needed if the information from the previous survey is not available?

Q6
The manager of Pizza Delight claims that at least 95% of its orders are delivered within 15
minutes of the time the order is place. A random sample of 150 orders revealed that 138 were
delivered within the promised time.

a) Test the manager’s claim at the 0.1 level of significance by using a four-step p-value
approach to hypothesis testing.
b) Use the p-value obtained in part (a) to set up a decision rule for testing the manager’s
claim at other significance levels.

Q7
A five-year-old census recorded that 15% of the families in a large community lived below
the poverty level. To determine if this percentage has changed, a random sample of 500
families is studied and 86 are found to be living below the poverty level. Does this finding
indicate that the current percentage differ from the percentage of families living below the
poverty level 5 years ago? Use a 0.05 level of significance.
Q8
One of the biggest issues facing e-retailers is the ability to reduce the proportion of customers
who cancel their transactions after they have selected their products. It has been estimated
that about half of prospective customers cancel their transactions after they have selected
their products. Suppose that a company changed its web site so that customers could use a
single-page checkout process rather than multiple pages. A sample of 500 customers who had
selected their products was provided with the new checkout system. Of these 500 customers,
210 cancelled their transactions after they had selected their products.

a) At the 0.01 level of significance, is there evidence that the population proportion of
customers who select products and then cancel their transaction is less than 0.50 with
the new system?
b) Suppose that a sample of n=100 customers (instead of n=500 customers) were provided
with the new checkout system and that 42 of those customers cancelled their
transactions after they had selected their products. At the 0.01 level of significance, is
there evidence that the population proportion of customers who select products and then
cancel their transaction is less than 0.50 with the new system?
c) Compare the results of (a) and (b) and discuss the effect that sample size has on the
outcome, and, in general, in hypothesis testing.

Q9
Grant, Inc., a manufacturer of women’s dress blouses, knows that its brand is carried in 19
percent of the women’s clothing stores in Hong Kong. Grant recently sampled 85 women’s
clothing stores in mainland China and found that 14 percent of the stores carried the brand.

a) At the 0.05 level of significance, is there evidence that Grant has poorer distribution in
mainland China than it does in Hong Kong?
b) Interpret the decision you made in (i) in the situation being examined.
c) What is the p-value in (i)? Do you make the same decision as in (i) at α = 0.05 if you
use the p-value approach?
d) Suppose that the sample size n = 85 is fixed and further suppose that the penalty of
committing type II is serious, which α value (0.05 or 0.10) do you choose for the
hypothesis testing? Briefly explain your choice.

Q10
From past records, a charity has found that 42% of donors in a year will denote again in the
next year. A random sample of 300 donors from last year was taken.

a) What is the standard error of the sample proportion who will donate again this year?
b) What is the probability that the sample proportion is between 0.40 and 0.45?
c) Without doing the calculations, state in which of the following ranges the sample
proportion is more likely to lie: 0.39 to 0.41, 0.41 to 0.43, 0.43 to 0.45.
d) Interpret the answer obtained in (ii).
Q11
a) In order to estimate the unemployment rate of Hong Kong, a random sample of 8500
people was selected in 2002 and 618 people were found to be unemployed. Find a 95%
confidence interval for the unemployment rate of Hong Kong in 2002. Give your
answer to the fourth decimal place.
b) If you want to be 95% confident of estimating the unemployment rate of Hong Kong in
part (a) to within ±0.2%, what sample size is needed?
c) According to the report given by the Census and Statistics Department of Hong Kong,
the actual unemployment rate of Hong Kong in 2002 is 7.3%. In a survey of 620 people
in Shatin, 34 people were found to be unemployed. Is there evidence that the Shatin
unemployment rate was lower than the Hong Kong unemployment rate at the 0.05 level
of significance?

Q12
Suppose there is population with 4 customers. The interested categorical variable is the
proportion of customers that prefer your brand. In this population, one of them prefers your
brand, and the others do not.

a) Find the population proportion (π) if customers that prefer your brand.

In the process of developing sampling distribution, all possible samples (taken with
replacement) of size n = 2 are obtained. The sample proportion (p) of customers that prefer
your brand is considered as the sample statistic.

b) Develop the probability distribution of the sample proportion (p).

c) Show that the sample proportion p is an unbiased estimator for π.
d) Does the sampling distribution of p follow a Normal Distribution? Explain.

Q13
Your company markets a computer medical diagnostic programme. The programme scans the
results of medical test on white blood cells. The patient could be referred to a doctor if the
proportion of white blood cells is at most 5%, and however the patient can leave if the
proportion of white blood cells is more than 5%.

In studying the effectiveness of the programme, your null hypothesis is that the
population proportion of white blood cells is at most 5%, with the alternative hypothesis
being that the population proportion of white blood cells is more than 5%.

a) Would you rather make a type I or a type II error? Explain.

b) You want to have 90% confidence of estimating the population proportion of white
blood cells to within ±1.95%. Because you have not previously undertaken such a study,
there is no information available from past data. Determine the sample size needed.
Q14
MTR Corporation has to conduct surveys regularly to evaluate its service quality. According
to previous studies, 87% of the passengers refuse to take part in such surveys.

a) At minimum, how many passengers must be sampled so that the 95% confidence
interval will specify the population proportion of responded passengers to within ±6%?

MTR recently sampled 350 passengers, and only 28 of them responded to the survey.

b) At the 0.05 level of significance, is there evidence that the response rate has been
dropped?
c) Find a 95% confidence interval for the population proportion of passengers who are
willing to respond to the survey.