BIODATA SINGKAT

 NAMA : Prof. DR. SAMSUBAR SALEH. M.Soc.Sc

 PEKERJAAN : DOSEN FEB-UGM
 JABATAN : GURU BESAR ILMU EKONOMI – IV/c
 ALAMAT : JL WELING II / 39 A. DEPOK-SLEMAN
 BIDANG MINAT : EKONOMI-PUBLIK
STATISTIKA TERAPAN
TEORI EKONOMI MAKRO/MIKRO
PENGALAMAN KERJA : DOSEN FEB-UGM
: ASSISTEN WADEK III.
: PENGELOLA S2/S3 FEB-UGM
: SUPERVISOR BSNP DIKNAS
: PENGELOLA PENELITIAN EKONOMI
: KONSULTAN PERENC/PEMB DIY
: KONSULTAN & FASILITATOR KEU-DA
HP: 0811253224.
Email :[email protected]
 TOPICS
Week Topics
1 Probability
2 Probability ( Conditional )
3 Prob-Distribution ( Discrete )
4 Prob-Distribution (Continuous)
5 Prob- Discrete to Continuous
6 Sampling- Theory
7 Estimation-Theory
8 Mid-Examination
 Topics
Week Topics
9 Estimation-Theory
10 Hypotheses testing
11 Testing for large sample
12 Testing for small sample
13 Chy-square test
14 Analysis of Variance
15 Multiple regression model
16 Final-Examination
 Grading-System
 Score Grade
 85 – 100 A
 80 – 85 A-
 75 – 79 B+
 70 – 74 B
 65 – 69 B-
 60 – 64 C+
 55 – 59 C
 50 – 54 C-
 45 – 49 D
 Regulation
 You must attend the class at least 80%.
 Don’t forget to bring your calculator.
 Turn off your mobile phone.
 Be quiet during the class activity.
 Scoring-System:
 1. Class activity: 5%
 2. Quiz : 20 %
 3. Mid- Exam : 35 %
 4. Final Exam : 40 %.
 PROBABILITY
PROBABILITY IS A NUMERICAL MEASURE OF THE
LIKELIHOOD OF AN EVENT OR MORE OCCURRING or
CHANCE AN EVENT OR MORE WILL OCCUR AS A RESULT
OF AN EXPERIMENT.
THE CONCEPTS OF PROBABILITY ARE SPECIALLY
RELEVANT IN BUSINESS. BUSINESSMEN MAKE DECISIONS
IN THE FACE OF UNCERTAINTY DAY BY DAY. FOR
EXAMPLE:
1. WHEN COMPANY LAUNCHES A NEW PRODUCT.
2.THE LIKELIHOOD OF A NEW INVESTMENT PROJECT
BEING PROFITABLE MAY BE UNKNOWN. THEREFORE,
DECISION MAKING HAS TO BE BASED ON SOME
ASSESSMENT OF THE PROBABILITY OF POSSIBLE
OUTCOMES OCCURRING.
3.ENGINEERING INSTALATION DESIGN.
 EXPERIMENT, OUTCOMES AND EVENT
 PROBABILITY IS ABOUT ASSESSING THE CHANCE OF AN EVENT
OR A SERIES OF EVENTS HAPPENING.
 OUTCOME; A PARTICULAR RESULT OF AN EXPERIMENT.
 EVENT ; A COLLECTION OF ONE OR MORE OUTCOMES OF AN
EXPERIMENT.

EXPERIMENT: TOSS 2 COINS ROLL 2 DICE

HH
ALL POSSIBLE HT THERE ARE 36
OUTCOMES TH POSSIBLE OUTCOMES
TT

SOME POSSIBLE THE FREQUENCY TOTAL NUMBER OF

EVENTS OF TAIL WILL APPEAR
AT LEAST ONCE BOTH DICE = 2 OR 10
 THE MULTIPLICATION RULE OF PROBABILITY

1. INDEPENDENT EVENTS: TWO EVENTS ARE

INDEPENDENT WHEN THE OCCURRENCE OF ONE
EVENT HAS NO EFFECT ON THE PROBABILITY OF
OCCURRENCE OF THE OTHER EVENT.
P ( A and B ) = P ( A ) . P ( B )

2. DEPENDENT EVENT: TWO EVENTS ARE DEPENDENT

WHEN THE OCCURRENCE OF ONE EVENT AFFECTTHE
PROBABILITY OF OCCURRENCE OTHER EVENT.
P ( A and B ) = P ( A ) . P ( B/A )
 Example
 IN A BOX THERE ARE 10 RED BALLS, 6
WHITE BALLS AND 4 BLUE BALLS. ONE
BALL IS SELECTED AT RANDOM 3 TIMES.
WHAT IS THE PROBABILITY :
a. All balls are white ( with replacement ).
b. All balls are white ( without replacement ).
c. The 1st selection is red, the 2nd selection is red and the 3rd
selection is blue ( without replacement ).
d. There are 2 red balls and 1 blue ball ( without replacement )
e. There are 1 red, 1 white and 1 blue ball ( without rep).
 Example
 A commercial aircraft Boeing 747 has 4
engines. This aircraft can fly safely if at
least 3 of the engines run properly. The
probability of engines A break down = 0.10,
B = 0.05, C = 0.15 and engine D = 0.03.
What is the probability that this aircraft
can fly safely?
 THE RULES OF PROBABILITY

THE ADDITION RULE OF PROBABILITY:

1. FOR MUTUALLY EXCLUSIVE EVENTS.
P ( A or B ) = P ( A ) + P ( B )
EVENTS A & B CAN’T OCCUR SIMULTANEOUSLY
OR AT THE SAME TIME.
2. FOR NON-MUTUALLY EXCLUSIVE EVENTS:
P ( A or B ) = P ( A ) + P ( B ) – P ( A and B )
A and B CAN OCCUR SIMULTANEOUSLY.
 CONDITIONAL PROBABILITY

 THE PROBABILITY OF A PARTICULAR

EVENT OCCURING, GIVEN THAT
ANOTHER EVENT HAS ALREADY
OCCURRED.
 IF, P ( A and B ) = P ( A ) . P ( B/A ), THUS;
P ( A and B )
 P ( B/A ) = -------------------------
P(A)
 EXAMPLE

 SCORES : A B C F
CLASSES
X 10 15 8 2
Y 13 16 7 4
Z 8 11 6 5
CALCULATE THE PROBABILITY:
1. P ( A or B or F ) 2. P ( X or C ) 3. P ( Y or Z )
4. P ( Z or A ) 5. P ( C/X ) 6. P ( Z/F )
 Example
 In Lab: A, there are 10 units Acer computer, 5 units Compact
and 15 units Toshiba. In lab: B, there are 15 units Acer
computers, 10 unit Compact and 10 units Toshiba. In lab: C,
there are 10 units Acer, 10 units Compact and 10 units
Toshiba.
 A. If each lab is selected one computer randomly, what is the
probability that all of the computers are Toshiba.
 B. If one computer is selected at random from one lab, what is
the probability that the computer is Acer or Compact.
 BAYES’S RULE FOR CONDITIONAL PROBABILITY

P ( Ai ) P ( B/Ai )
P ( Ai/B ) = ----------------------------------------------------------
P ( A1) P ( B/A1 ) + -------+ P ( An ) P ( B/An )
EXAMPLE 1:
A car repair firm employs three paint sprayers, Tomy, Dicky and
Harry. Tomy is responsible for painting 25 % of all the cars
produced, Dicky for 35 % and Harry for the remaining 40 %. On
the basis of frequent quality inspections it is discovered that, on
average, 5 % of the car sprayed by Tomy fall below the minimum
standard, while for Dicky is 8 % and for Harry 10 %. If a car is
selected at random is judged to be sub-standard. What is the
probability that it was sprayed by Harry?
b. If a car selected at random is judged to be standard, What is the
probability that it was sprayed by Tomy or Dicky?
 Example:2

 The number of students from class A = 35, class B

= 30, class C = 40 and class D = 25. Based on the
examination record, it was found that 10% of
students from class A was fail, class B = 5%, class
C = 15 % and class D = 20 %. If one student was
selected at random was indicated that he did well
in the exam. What is the probability that he is
from class B or D.
 Mathematical Expectation
 Finding the expected value of the Mean, Variance and
Standard Deviation of a probability distribution:

Mean = ∑ Xi . P ( Xi ), where Xi is the value of variable X, and

P (Xi) is the probability of X.

Variance = ∑ ( Xi - µ )2 P ( Xi) or ∑ Xi2 P ( Xi ) - µ2

Std dev = √ variance

 Example
 A family has four children. Please calculate the
expected value and standard deviation of having male
children.
 Step1 : find out the value of Xi ( male children ).
 Step 2: find out the probability of having Xi.
 Xi : ?
 P( Xi ): ?
 Example
 The quantity of X demanded probability
200 units 0.15
225 0.20
250 0.30
275 0.25
300 0.10
a. What is the mean of quantity of X demanded.
b. What is the variance of the distribution?
c. When the price of X = $ 10 and AC = $ 8
What is the expected value of the profit?
 Probability distributions

 1. Discrete probability distribution:

Binomial distribution:
a. In each trials only two outcomes are possible:
success or failure, good or defect, pass or fail, girl
or boy, odd number or even number.
b. Each trial is independent to each other.
c. Probability of an event is assumed to remain
constant over all trials ( n trials ).
 Binomial Distribution
 The probability of obtaining the outcome “success” denoted by π and the outcome
“failure” denoted q or (1 – π ).
 If we are interested in the number of “success” or “failure” ( x ) occuring in ( n ) trials,
then, the probability binomial distribution is given by the formula:

n x n–x
C π q
x

Example:
The four engines of a commercial aircraft are design so that they each operate
independently. Test, carried out over a long period of time, show that there is a one-in-a
hundred chance of in-flight failure of a single engine.
What is the probability that on a given flight:
a. No failures occur?
b. No more than two failures occur?
c. At least two failures occur.
d.. At most 2 of the engines run well.
E. Less than three of the engines run well.
f. Two of the engines run well.
 BINOMIAL DISTRIBUTION
 PROBABILITY OF A STUDENT WILL PASS IN THE
FINAL STATISTICS EXAM = 0.80. IF 6 STUDENTS
ARE SELECTED AT RANDOM, WHAT IS THE
PROBABILITY OF OBTAINING:

 a. At most 2 of them are fail in the exam.

 b. At least 4 of them will pass in the exam.
 Example
 If 7 students were selected at random, what is
the probability that:
 A. More than 4 students will get score A or C.
 B. at least 5 students will get F.
 C. less than 3 students will get B or C.
 D. all of them will get A or B or F.
 Example : 2
 Suppose that a family has 5 children. What is the
probability of having:
a. At least 3 of them are male.
b. All of them are female.
c. At most there is one male.
d. the number of female is more than 4.
 Example : 3
 Two dice is thrown 5 times, what is the
probability of obtaining:
a. Total number of both dice is 10 appears at
most twice.
b. Total number of both dice is 5 appears at
least 4 times.
c. Total number of both dice is 8 appears
exactly 3 times.
 Continuous Probability Distribution
 The normal probability distribution has the following
major characteristics :
 1. It is bell-shaped and has a single peak.
 2. The mean, median and mode are equal.
 3. The location of normal distribution is
determined by the µ and σ.
 4. It falls off smoothly in either direction from the
µ and the curve gets closer and closer to X
axis but never actually touches it.
 NORMAL DISTRIBUTION
 1. Xi ~ N ( µ, σ )

 2. Zi ~ N ( 0, 1 )

 What is the difference in meaning between the

first and the second terms.
 STANDARD NORMAL VALUE ( Z )

Xi - µ
 Zi = ---------------
σ
Zi MEASURES THE DISTANCE OF ANY
PARTICULAR VALUE OF X FROM THE µ,
MEASURED IN UNITS OF THE STANDARD
DEVIATION.
THE SIGN OF Z MIGHT BE POSITIVE, NEGATIVE
OR ZERO. IT DEPENDS ON THE DIFFERENCE
BETWEEN Xi VALUE AND ITS MEAN ( µ ).
FINDING AREAS UNDER THE NORMAL CURVE

Zi-value PROBABILITY( AREAS )

1.65 0.4505
1.96 0.4750
1.28 0.3997
0.50 0.1915
1.00 0.3413
Starting point of z value is always from where Zi = 0 up
to the point of another zi value ( the difference between
mean and a selected value of Xi ).
 Example:1 ( Zi value :appendix D, p:720)
 The scores of 250 students in mathematics class follow the
normal distribution, with a mean of 69 and standard
deviation of 10. What is the probability or areas under this
normal curve for the scores :
a. Between 60 and 65.
b. ≥ 80
c. Between 64 and 80.
d. If the minimum passing grade is 55. how many students fail
in this exam.
e. What is the minimum scores for 5 % the best.
f. What is the maximum scores for 37.5% above the average.
g. What is the max score for 10% the most stupid students in
class.
 Example: 2
The minimum salary for 4% the top of the employees is Rp
35 millions. On the other hand, the maximum salary for 10%
the lowest of the employees is Rp 24 millions. If assumed that
the salaries of the employees is normally distributed.
Calculate the probability of the employees earn:
a. More than or equal to Rp 26 millions.
b. Less than or equal to Rp 3o miliions.
c. Between Rp 30 and Rp 34 millions
d. The minimum salary for 2% the top.
e. The maximum salary for 5% above the average.
f. The maximum salary for 15% the lowest.
 Normal Distribution
 An electrical firm manufactures light bulbs that have a
length of life that is normally distributed with a mean
800 hours and variance of 1600 hours. Find the
probability:
a. That a bulb burns between 778 and 834 hours.
b. That a bulb burns ≥ 850 hours or ≤ 775 hours.
c. That a bulb burns between 720 and 780 hours.
d. The minimum length of life for 12.5% the most durable.
e. The minimum length of life for 22% below the average.
 MID-EXAM QUESTIONS

1. MEASURES OF CENTRAL TENDENCY:

MEAN, MEDIAN AND MODE AND
COEFFICIENT OF VARIATION.
2. MEASURES OF LOCALITY:
QUARTILE, DECILE AND PERCENTILES.
3. DISPERSION: VARIANCE, STANDARD
DEVIATION AND COEFFICIENT OF
VARIATION FOR UNGROUPED DATA.
 MID EXAM QUESTIONS

4. PROBABILITY ( 5 QUESTIONS ):
1. INDEPENDENT TO CONDITIONAL PROB
2. BAYES THEOREM
3. BINOMIAL DISTRIBUTION
4. NORMAL DISTRIBUTION
5. BINOMIAL TO NORMAL
 MID EXAM QUESTIONS
 BINOMIAL DISTRIBUTION ( 2 QUEST)
 NORMAL DISTRIBUTION ( 2 QUEST )

YOU MAY SELECT ONLY 4 QUESTIONS.

DURATION = 120 MINUTES
OPEN-BOOK AND NO CHEATING OK?
THERE IS NO MORE MAKE-UP EXAM!
REWARD SYSTEM: CHOCOLATE BAR.
WHEN U FIND ANY DIFFICULTIES PLEASE
DISCUSS WITH ME OR CONTACT TO
0811253224.
 The Normal approximation to the Binomial
 Binomial distribution is effective if the number of
trials is relatively small. But, generating a binomial
distribution for a large number of trials would be
very time consuming. A more efficient approach is to
apply the normal approximation to the Binomial:
The approach is determined as follows:
µ=nπ Xi – n π
σ = √ n π q then, Z =-------------
√ nπq
 Example
 If 10 % of all business executives fill out a given
marketing survey questionnaire, what is the
probability of getting:
a. At least 15 questionnaires will be back out of 200
distributed to executives?
b. What is the probability that between 23 and 30
questionnaires will be filled out?
c. What is the probability that 17 questionnaires or
less will be filled out.

Don’t forget to apply the correction factor!

 Extra-Bonus
A manufacture produces 10.000 units of product
daily. On the basis of frequent inspections it is
dicovered, 500 unit of product is classified as
defective. What is the probability that:

a. More than 525 units of product is defective.

b. At least 9450 units of product is good.
c. Less than 475 units of product is defective.
d. The number of good product is between 9450
units and 9550 units.
 The last quiz before mid exam
 1. Binomial distribution
 2. Normal distribution
 3. From Binomial to Normal.

 The quiz will be given on Tuesday next

week. ( don’t forget to bring your calculator
and statistics tables.
SAMPLING METHODS & ESTIMATION
MODELS
 Sampling Methods
 REASONS TO SAMPLE
1. TO OBSERVE THE WHOLE POPULATION WOULD
BE TIME CONSUMING AND VERY EXPENSIVE.
2. THE PHYSICAL IMPOSSIBILITY OF CHECKING ALL
ITEMS IN THE POPULATION.
3. THE DESTRUCTIVE NATURE OF SOME TESTS.
4. THE SAMPLE RESULTS ARE ADEQUATE TO INFER
THE CHARACTERISTICS OF POPULATION.

ERROR: sampling error VS non-sampling error

 SAMPLING METHODS
 1. SIMPLE RANDOM SAMPLE: A SAMPLE SELECTED SO THAT
EACH ITEM IN THE POPULATION HAS THE SAME
PROBABILITY OF BEING INCLUDED.
 2. SYSTEMATIC RANDOM SAMPLE: A RANDOM STARTING
POINT k IS SELECTED, AND THEN EVERY kth MEMBER OF
THE POPULATION IS SELECTED.
 3. STRATIFIED RANDOM SAMPLE : A POPULATION IS
DIVIDED INTO SUB-GROUPS, CALLED STRATA, AND A
SAMPLE IS RANDOMLY SELECTED FROM EACH STRATUM.
 4.CLUSTER SAMPLING: A POPULATION IS DIVIDED INTO
CLUSTERS USING NATURALLY OCCURING GEOGRAPHIC OR
OTHER BOUNDARIES. THEN, CLUSTER ARE RANDOMLY
SELECTED AND A SAMPLE IS COLLECTED BY RANDOMLY
SELECTING FROM EACH CLUSTER.
 Sampling Methods
 Purposive random sampling
 Proportional random sampling

 Non-Random sampling
 Convenience sampling
 Judgment sampling
 Snowball sampling
 HOW CAN SAMPLES BE USED TO MAKE ESTIMATES?
 A SAMPLE IS A TOOL TO INFER SOMETHING ABOUT
POPULATION OR STATISTICS CAN BE USED TO FIND
SOMETHING ABOUT A CHARACTERISTIC OF
POPULATION OR A PARAMETER.

EXAMPLE: X CAN BE USED TO ESTIMATE µ.

Central limit theorem :
If all samples of a particular size are selected from any
population, the sampling distribution of the sample mean
is approximately a normal distribution. This
approximation improves with larger samples.
SAMPLING DISTRIBUTION OF THE SAMPLE MEAN
 SAMPLING DISTRIBUTION OF THE SAMPLE MEAN IS A
PROBABILITY DISTRIBUTION OF ALL POSSIBLE
SAMPLE MEANS OF A GIVEN SAMPLE SIZE ( n ).
 THE FOLLOWING EXAMPLE ILLUSTRATES THE
CONTRUCTION OF A SAMPLING DISTRIBUTION OF
SAMPLE MEAN.
 LET US ASSUME THAT A POPULATION CONSISTS OF
FOUR ELEMENTS X1 =1, X2 = 2, X3 = 3 AND X4 = 4.
CONSIDER ALL THE SAMPLES OF A GIVEN SIZE n = 2
THAT COULD BE DRAWN FROM THIS POPULATION.
(CONSIDER CAREFULLY WHETHER ONE IS SAMPLING
WITH OR WITHOUT REPLACEMENT).
 Sampling with Replacement
All possible All possible
samples sample means samples sample means
1. 1.1 1.0 9. 3.1 2.0
2. 1.2 1.5 10. 3.2 2.5
3. 1.3 2.0 11. 3.3 3.0
4. 1.4 2.5 12. 3.4 3.5
5. 2.1 1.5 13. 4.1 2.5
6. 2.2 2.0 14. 4.2 3.0
7. 2.3 2.5 15. 4.3 3.5
8 2.4 3.0 16. 4.4 4.0
µ = ( 1 + 2 + 3 + 4 ) : 4 = 2.5 ( population mean )
µx = ( 1 + 1.5 + 2.0 +------------- + 4.0 ) : 16 = 2.5 The mean of all the means
is equal to the population mean or µ.
 Variance and Standard Deviation
σ2= ( 1 – 2.5 )2+( 2 – 2.5 )2 +( 3 – 2.5 )2 + ( 4 – 2.5 )2 : 4
= ( 2.25 + 0.25 + 0.25 + 2.25): 4 = 5/4 or σ2 = 5/4 = 1.25
σ = √ 1.25 = 1.118 ( std deviation of population)
The standard deviation of the sample means is formally
referred as standard error of the mean.
σx2=( 1 -2.5 )2 + ( 1.5 – 2.5 )2 +------------------------- + ( 4 – 2.5 )2 : 16
= 10 : 16 = 0.625 and σx = √ 0.625 = 0.79 or
σ 1.118
σx = ----- = ----------- = 0.79
√n √2
Note that when we increase n, the σx will decrease.
 Without Replacement
All possible samples Sample means
1.2 1.5
1.3 2.0
1.4 2.5
2.3 2.5
2.4 3.0
3.4 3.5
µx = ( 1.5 + 2.0 + ------- + 3.5 ) : 6 = 2.5
σx2 = ( 1.5 – 2.5 )2 + ( 2.0 – 2.5 )2 +----- + ( 3.5 – 2.5)2 : 6
= (1 + 0.25 + 0 + 0 + 0.25 + 1) = 2.5 : 6 = 0.417
σ
σx = √ 0.417 = 0.645 or σx = --- ( √ ( N – n ) : ( N – 1 )
√n
 Example: Sampling Distribution of The Mean

 A population consists of three elements:

X1 = 25, X2= 30 and X3 = 35.
Calculate:
a. Sampling distribution of the mean if the
sample size = 2 ( with replacement and
without replacement ).
b. Variance and std deviation of the sample
means.
 1. Confidence interval for the population mean ( µ )
when n ≥ 30 ( Z value )

 Confidence interval for µ is estimated by:

X ± a sampling error or X ± z value SE
Z value depends on confidence level.
SE = standard error of the mean
SE = σ/√n, if std deviation of population is known.
But, if the std deviation of population is unknown,
SE = s/√n , s = std deviation of sample.
 Sampling Error and Confidence Interval Estimate

 Sampling Error : The diffrence between a sample

statistic and its corresponding population parameter.
This error will decrease as the sample size increase.
 Confidence interval estimate: A range of values
constructed from sample data so that the population
parameter is likely to within that range occur at
specified probability. The specified probability is
called the level of confidence.
 EXAMPLE: Confidence Interval for µ ( n≥30 )

 The mean and std deviation for the quality grade

point averages of a random samples of 36 college
seniors are calculated to be 2.9 and 0.3
respectively.
a. Find the 92 % confidence interval for the mean of
the entire senior class.
b. How large the sample size is required if we want
to reduce the sampling error not more than 0.05.
 Confidence Interval for µ ( n < 30 )
 The weights of 7 similar boxes of cereal are 9.8, 10.2, 10.4,
9.8, 10.0, 10.2 and 9.6 ounces.

Find a 90% confidence interval for he mean of all such boxes

of cereal. ( use t – table ).
Step1: calculate the mean and std deviation of sample.
2: use t table to find critical value for 90% C.L ( tv).
3: substitute of all information from step 1 and 2
into the formula:

X - tv ( sd/√n) ≤ u ≤ X + tv ( sd/√n )
 Level of Confidence
Required level value of α value of Z table
of confidence
90 % 10 % ± 1.65
95 % 5% ± 1.96
99 % 1% ± 2.58
Example : The prices at which certain type of instant coffee was
being sold on a given day were collected from a random
sample of 45 shops around the country. The mean price was $
1.95 with a standard deviation of $ 0.27. Compute a 80 %
confidence interval for the population mean.
 3. A CONFIDENCE INTERVAL FOR A
PROPORTION OF POPULATION ( π )
 A PROPORTION OF POPULATION ( π ) CAN BE
ESTIMATED BY THE FORMULA:
P = X/n
P = THE FRACTION OR PERCENT INDICATING THE PART
OF THE SAMPLE HAVING A PARTICULAR TRAIT OF
INTEREST.
n = SAMPLE SIZE, X IS A PART OF SAMPLE SIZE WHICH
HAVE A PARTICULAR TRAIT OF INTEREST.
CONFIDENCE INTERVAL FOR POPULATION PROPORTION
(π)

P ± Zv √ P( 1- P ) / n page:300 no:18
 Application
 The distribution of household that favor a certain bath soap in
West Java Province (use a 90% confidence level).
 Brand Number of households
 Palmolive 1500
 Lux 1800
 Zest 1500
 Beauty 1000
 Minty 1200
 Other brands 2000
 A. Calculate confidence interval for the proportion of households
that favor LUX bath soap for their families.
 B. What is the sample size should be selected if the maximum
error not more than 0.5%.
 2. Confidence interval for the population mean ( µ ) when the
sample size ( n < 30 ) t–table ( p:722 )

 Confidence interval for the µ is estimated by:

X ± a sampling error or X ± t table.SE
SE = S/√n ( std deviation of population is unknown).
Example :
The operating life of rechargeable cordless screwdrivers
produced by a firm is assumed to be normally distributed. A
sample of 15 screwdrivers is tested and the mean life is found
to be 8900 hours, with a sample std deviation of 500 hours.
Construct a 90% confidence interval estimate for the
population mean.
 Finding t - value

 Example : n = 10, confidence level = 90%.

 n = 24, confidence level = 95%
 Degree of freedom of t- value = df (n-1 )

df Two-tailed test,α t-value

9 10% ± 1.833
23 5% ± 2.069
 4. A confidence Interval for The diffrence between Two
Population Means ( µ1 - µ2 ), n ≥ 30

 Confidence interval for the diffrence between µ1 - µ2 is:

( X1 – X2 ) ± Zv σx
σx = pooled standard deviation.
X1 = the sample mean of X1
X2 = the sample mean of X2
n1 = the sample size of X1
n2 = the sample size of x2
 Example
A study was made to estimate the difference in salaries
of college professors in the private and state colleges
of Virginia. A random sample of 100 professor in the
private colleges showed an average of $ 15.000 per
month with a standard deviation of $ 1200. A random
sample of 200 professors in state colleges showed an
average salary of $ 16.000 with a standard deviation
of $ 1400. Find a 90% confidence interval for the
difference between the average salaries of professors
teaching in state and private colleges in Virginia.
 5. Estimating the difference between two population
means ( µ1- µ2 ), n< 30
( X1 - X2) ± tv SP

A taxi company is trying to decide whether to purchase brand A or brand

B tires for its fleets of taxis. To estimate the difference in the two brands,
an experiment is conducted using 12 tires of brand A and 14 tires of
brand B. The results are:
Brand A Brand B
Average wear-out 22.500 miles 23.600 miles
Std deviation 100 miles 50 miles

Compute 95% confidence interval for the difference between the average
quality for the two brands.
 EXAMPLE: POPULATION PROPORTION

 A new program for a youth club is planned in a small city. To

determine whether or not the program will get the city
government’s support. It is necessary to estimate the proportion
of young people who plan to use the club’s facilities. A survey of
100 randomly selected young people has shown that 22 will use
the facilities if they become available. Construct a 90%
confidence interval for the true proportion.
 n = 100, X = 22, P = 22/100 = 0.22 and ( 1 – P ) = 0.78
 Z value for CL = 90 % = ± 1.65.
 Example:
 The performance of stocks between Cement
Industries and Oil industries in 2007 ( in % ).
 Cement Industries Oil Industries
 Average yields 22 18
 Variance 3 2
 Sample size 35 40
Calculate interval estimate the difference in average
yields between cement industries and oil industries
( CL = 85 % ).
 Regression-Correlation Model
 Objectives:
 1. To know the functional relationship among

variables. Y = f ( Xi ), i = 1,2, 3, 4,........, n.

 2. To know the correlation among variables. (+/-).

 3. To measure the strenght of correlation between

Xi and Y ( Coefficient of Correlation ).
 4. To test hypotheses: t-test, F-test.

 5. To test the model on Classical Assumptions:

Normality, linearity, heteroscedasticity,
autocorrelation and multicollinearity.
Statistical Packages: SPSS and Eviews.
 Basic Model
 Simple Regression : Y = a + bX + ℮t
 ∑Y =na+b∑X
 ∑ XY = a ∑ X + b ∑ X2

 Multiple Regression Model.

 Y = ao + a1X1 + a2X2 + --------+ anXn + ℮t
 Y = dependent variable, Xi = independent
variables.
 ao = constant
 a1, a2, --, an = coefficients = slopes = ∂Y/∂Xi
 Regression- Model
 ao = constant is defined as the estimate
value of variableYthat is not affected by all
of independent variables ( Xi ) in the model,
but it is affected by other variables outside
the model.
 ai = coefficient = measures how much the
changes in the value of dependent variable
if the value of independent variable changes
by one unit.
Example : Regression and Correlation
Year Investment ( $ M ) Lending rate of interest (%)
2012 70 15
2013 80 13
2014 95 12
2015 110 10
2016 125 5
a. Construct the regression line by using OLS and explain the
meaning of a constant and coefficient.
b. Calculate R and R square.
c. When you expect the level of investment is $ 100 M, what is
prediction the level of lending rate of interest?
 Explanation
 Constant = 157.6 = The estimate value of
investment is $157.6 M that is not affected
by the level of lending rate of interest, but it
is affected by other variables outside the
model., such as ec growth, inflation, market
size etc.
 Coefficient = -5.6 = when the level of lending
rate of interest increase by 0.5 %, so the
level of investment will decrease by $ 2.8M.
 Explanation
 R = - 0.96, It can be concluded that the correlation
between the level of investment and the level of
lending rate of interest is very strong and both
variables correlate negatively.
 R-square = Coefficient of determination
 R-square ( -0.96 )2 = 0.92 = 92 %. It means that
the variation in the level of lending rate of interest
can explain around 92% in the variation of
investment, while 8% of other variation is
explained by other variables outside the model.
 If Investment = $ 100 M, then LRI is 10.28%.
 Example
Tx = 250 + 0.15 GDP + 0.25 TP – 45.6 INF + 0.35 ILG
MEAN
Tx = government tax revenues ( $ B ) 600
GDP = the level of Gross Domestic Product ( $ B ) 3000
TP = the number of tax payers ( 000 person ) 2500
INF = the country’s inflation rate ( % ) 10
ILG = the value of luxury goods imported ( $ B ) 450

a. Explain the meaning of constant and coefficients

b. Explain the meaning of elasticity.
Hypotheses Testing
 TESTING HYPOTHESES ( CH: 10 P 116-521)

 HYPOTHESIS TESTING: A PROCEDURE BASED ON

SAMPLE EVIDENCE TO DETERMINE WHETHER THE
HYPOTHESIS IS A REASONABLE STATEMENT.
 HYPOTHESIS: A STATEMENT ABOUT A POPULATION
DEVELOPED FOR THE PURPOSE OF TESTING.
 NULL HYPOTHESIS ( Ho ): SPECIFIES THE VALUE OF
THE PARAMETER TO BE TESTED. e.g: µ, π, ( µ1- µ2) OR
HYPOTHESES THAT WE FORMULATE WITH THE
HOPE OF REJECTING.
 ALTERNATIVE HYPOTHESIS ( Ha ): HYPOTHESES
THAT WE FORMULATE WITH THE HOPE OF
ACCEPTING.
 HYPOTHESIS TESTING PROCEDURE

 TWO-TAILED TEST: BASICALLY BE USED TO

TEST IF THE QUESTION ASK YOU ABOUT:
THE DIFFERENCE, CHANGE OR EFFECT.
( ALPHA IS DIVIDED BY 2 OR ± 1/2α )
 ONE TAILED TEST : BASICALLY BE USED TO
TEST IF THE QUESTION ASK YOU ABOUT:
GREATER THAN, LESS THAN, INCREASE,
DECREASE, OR MORE THAN. THE CRITICAL
STATISTIC TABLE MAY BE IN THE LEFT OR
IN THE RIGHT TAIL OF THE CURVE.
THE GENERAL PROCEDURE FOR A HYPOTHESIS TEST
 START State the Ho and Ha ( two or one tailed test )

 Select the desired CL or alpha

 Determine the critical table ( Z, t, F or x2 )

 Determine the rejection and acceptance areas of Ho.

 Compute the critical ratio by using data sample ( test-statistic )

 Compare the critical ratio and table ( accept or reject Ho )

Conclusion
 1.Testing the Population Mean ( µ ), n ≥ 30
Example: Mr X, a mouthwash distributor, has stated that the
average cost to process a sales order is $ 13,25. Miss Y, cost
controller, fears that the average cost of processing is more
than $13.25. She is interested in taking action if cost are high,
but she does not care if the actual average cost is below the
assumed value. A random sample of 100 orders had a sample
mean of $13.35, assuming the std deviation is $ 0.50. Conduct
a test at 5 % level of significance and can you conclude that
the average cost of a sales order is more than $13.25?
 TEST STATISTIC FOR µ ( n ≥ 30)
 Ho=
 Ha=
 CRITICAL VALUES ( Z TABLE )
 ACCEPTANCE & REJECTION AREAS

 TEST STATISTIC: X - µ
Zh = ---------
SD/√n
. TEST STATISTIC IS FOUND FROM SAMPLE
INFORMATION.
. DECISION: ACCEPT OR REJECT Ho.
. CONCLUSION:
 2. TEST STATISTIC FOR π
(POPULATION PROPORTION)
 TEST STATISTIC:

 P–π
 Zh = ---------------
 π ( 1 –π )/n
 TESTING FOR A PROPORTION
POPULATION ( π )
 RESEARCH AT THE FEB-UGM INDICATES THAT
50% OF THE STUDENTS CHANGE THEIR MAJOR
OF STUDY AFTER THEIR FIRST YEAR IN A
PROGRAM. A RANDOM SAMPLE OF 100
STUDENTS IN THE BUSINESS PROGRAM
REVEALED THAT 48% HAD CHANGED THEIR
MAJOR AREA OF STUDY AFTER THEIR FIRST
YEAR OF THE PROGRAM. Has there been a
significant decrease in the proportion of students who
change their major after the first year in this program?
Test at the 0.05 level of significance.
 Example:2
Distribution of data after promoting Lux on Televion a few months ago.
Brand of bath soap Number of Household
Palmolive 1000
Lux 1500
Zest 1000
Beauty 750
Minty 1250
Maya 1000
Other Brands 3500
Assumption: Before promotion, the market share of Lux = 14%.
a. Can you conclude that the proportion of HH that favor Lux is
different from 14%.
b. Can you conclude that the proportion of HH that favor Lux is higher
than 14 %. ( Alpha = 15 % ).
 5. Testing The Population Mean (µ ), n < 30
( Use t-table ) p: 785

 Test Statistic:
 X -µ
th = ------------
SD / n
 Example
 The distribution of gasoline consumption of 6 samples of
Honda Astrea can be reported as follow:
Sample Range
1 54 km/l
2 53
3 56
4 52
5 50
6 55
The manufacture claimed that the average of gasoline
consumption was 55 km/l. Can you conclude that this claim is too
overestimate? ( use alpha = 5 % ).
 TESTING THE DIFFERENCE BETWEEN TWO
POPULATION MEANS
 PARAMETRIC STATISTICS:
 1. SPSS: PAIRED SAMPLES
 2. EVIEWS: UNPAIRED SAMPLES:
 EQUALITY OF VARIANCE TEST
 3. EXCEL: DATA ANALYSIS

 NON PARAMETRIC STATISTICS:

 SPSS : RELATED SAMPLES, WILCOXON
SIGN RANK TEST.
 3.TEST STATISTIC FOR (µ1 -µ2), n ≥ 30
(Independent-samples test )
 Ho:
 Ha:
 TEST STATISTIC:
 X1 – X2
 Zh = ---------------------------
 var1/n1 + var2/n2
 EXAMPLE
 THE PRODUCTION OF TELEVISION TUBES
WEEKLY IN THE COMPANY ABC:
MALE WOKERS FEMALE WORKERS

AVERAGE PROD 450 UNITS 460 UNITS

VARIANCE 90 UNITS 110 UNITS
SAMPLE SIZE 40 WORKERS 50 WORKERS

CAN YOU CONCLUDE THAT AVERAGE PRODUCTIVITY OF

FEMALE WORKERS IS HIGHER THAN MALE WORKERS?
( ALPHA = 10 % )
 4:Two –Sample tests about Proportion ( π1 – π2 )

A random sample of 100 young women revealed 19 liked

the Heavenly fragrance well enough to purchase it.
Similarly, a random sample of 200 older women revealed
62 liked the fragrance well enough to make a purchase.
Can you conclude that there is a difference in the
proportion of younger and older women who like the
Heavenly fragrance? ( alpha = 5%).

Pooled sample proportion Pc = (X1 + X2) / (n1 + n2 )

Test Statistic: Zh = P1 –P2 / Sd

Sd = Pc ( 1 – Pc ) / n1 + Pc ( 1 – Pc ) / n2
 6.TEST STATISTIC FOR (µ1 - µ2), n < 30
( USE- t TABLE )
 TEST STATISTIC:
 X1 - X2
 th = -------------------------------------------
 ( n1-1) var1+ (n2-1) var2 1 +1
 (n1 + n2 – 2) n1 n2
 Testing (µ1 - µ2 ), n < 30
 Dr. Dony, a psychologist, administered IQ tests to
determine if female FEB students were as smart as
male students. The random sample of 15 females
had a mean score of 131 with std deviation of 17.
The random sample of 13 male students had a
mean of 126 and a std deviation of 14. At 0.01 level
of significance:
 a. is there a significant difference in their IQ?
 b. Can you conclude that the average female
students IQ is greater than male students IQ?
 6. Dependent Samples test
Sample Productivity of Workers
After Training Before Training d ( d-d ) ( d – d )2
1 235 units 228 units 7 2.4 5.76
2 210 205 5 0.4 0.16
3 231 219 12 7.4 54.76
4 242 240 2 -2.6 6.76
5 205 198 7 2.4 5.76
6 230 223 7 2.4 5.76
7 231 227 4 -0.6 0.36
8 210 215 -5 -9.6 92.16
9 225 222 3 -1.6 2.56
10 249 245 4 -0.6 0.36
Can you conclude that the training program increase the
productivity of the employees? ( alpha = 5% ).
 ∑ d = 46 d = 46/10 = 4.6

 SD = ∑ ( d – d )2
 (n–1)
 Test statistic: d
 SD / n
 Example:2
Sample of customer Score of: New Menu Old menu
1 36 35
2 48 46
3 50 51
4 76 74
5 55 56
6 60 59
7 71 72
8 66 64
Can you conclude that the new menu is more delicious than
the old one? ( alpha = 1% ).
 7: CHY SQUARE TEST
Table: p: 787
 Chy- square tests are used in a procedure that
involves the comparison of the differences between
the sample frequencies of the occurrence ( Oij ) and
the hypothetical or theoretical population frequencies
( Eij ) ( Expected value ). ( Goodness of Fit ).
 It can also be used to test relationship between
variables ( independency test ).
 Critical value of x2 depends on the number of rows
and columns
 Chy square table
 Chy- square table is always one tailed in the
right side of the curve.
 Critical table is X2 ά df ( r -1 )( c - 1 ).
 Ho is accepted if test statistics calculated is
less than or equal to its critical table.
 Ho is rejected if test statistics calculated is
greater than its critical table.
 Chy-Square test

 Test statistic:
 ( Oij – Eij )2
 Xh2 =Σ --------------
 Eij
 Oij = observed frequencies in ith row & jth column
 Eij = expected frequencies in ith row & jth column
 EXAMPLE
 A GARMENT COMPANY IN CAKUNG RECORDS THE
PERFORMANCE OF ITS LABOR PRODUCTIVITY
RANDOMLY.
 THE LEVEL OF PRODUCTIVITY
 LOW MODERATE HIGH
 WORK-SHIFT
 MORNING (I) 40 45 50
 AFTERNOON(II) 60 55 60
 NIGHT(III) 40 30 25
 Based on this research, what is your conclusion?
 (α = 5%)
 CHY SQUARE: INDEPENDENCY TEST

 DISTRIBUTION OF DATA COLLECTED BY UNILEVER

INDONESIA WAS RECORDED AS FOLLOW:
 Color of bath soap: Pink White Yellow
 Gender: Man 10 10 20
 Woman 25 20 5
What is your conclusion? ( UseAlpha = 5 % )

Exercises: check your book p : 661-662-663.

 ANALYSIS of VARIANCE
 This method can be used to test the difference
among population means ( the number of
specific sample is more than two or k > 2.
 The steps of testing the hypotesis.
 1. Calculate the variance within samples ( σ2w).
 2. Calculate variance between or among the
samples (σ2b).
 3. Calculate F table.
 4. Calculate F statistic.
 ANALYSIS OF VARIANCE
FERTILIZER: A B C D
SAMPLE
1 10 kgs 12 kgs 11 kgs 9 kgs
2 12 11 10 10
3 13 10 9 8
4 11 10 10 8
5 14 12 10 10

Can you conclude that the average productivity of those

fertilizers are significantly different? ( alpha = 5% ).