A random sample of size n = 121 yielded p^ = .88.

a. Is the sample size large enough to use the methods of this section to construct a confidence interval for p? Explain.

b. Construct a 90% confidence interval for p.

c. What assumption is necessary to ensure the validity of this confidence interval?

Short Answer

Expert verified

a. The sample size is not large enough

b. The 90% confidence interval is0.8314,0.9286

c.The samples are random samples,and the sample size is large enough, it must benp^15,n1-p^15

Step by step solution

01

Given information

A random sample of size n = 121 yielded p^= .88.

They need to compute the following

a. If the sample size is large enough

b. 90% confidence interval for p

c. Assumptions are necessary to ensure the validity of this confidence interval.

02

(a) Explanation: If the sample size is large enough or not

We know that the sample size is large enough only if np^15,n1-p^15

Here

np^=1210.88=106.4815n1-p^=1211-0.88=14.52<15

The second condition is not satisfied.

Hence the sample is not large

03

(b) Calculation: 90% confidence interval for p

Here the confidence coefficient is 90%, hence α=10%.Now from the standard normal distribution table,zα2=1.645

The margin of error

E=zα2×p^1-p^n=1.645×0.88×1-0.88121=0.0486

Hence 90% lower limit:p^-E=0.88-0.0486=0.8314

90% upper limit:p^+E=0.88+0.0486=0.9286

The 90% confidence interval is0.8314,0.9286

04

(c) The validity of assumptions

The following conditions are to be satisfied in order to calculate the construction of the confidence interval:

1. The samples are a random sample

2. The sample size is large enough; it must benp^15,n1-p^15

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Question: Find the following probabilities for the standard normal random variable z:

a.P(z>1.46)b.P(z<-1.56)c.P(.67z<2.41)d.P(-1.96z-.33)e.P(Z0)f.P(-2.33<z<1.50)

Producer willingness to supply biomass. The conversion of biomass to energy is critical for producing transportation fuels. How willing are producers to supply biomass products such as cereal straw, corn stover, and surplus hay? Economists surveyed producers in both mid-Missouri and southern Illinois (Biomass and Energy, Vol. 36, 2012). Independent samples of 431 Missouri producers and 508 Illinois producers participated in the survey. Each producer was asked to give the maximum proportion of hay produced that they would be willing to sell to the biomass market. Summary statistics for the two groups of producers are listed in the table. Does the mean amount of surplus that hay producers are willing to sell to the biomass market differ for the two areas, Missouri and Illinois? Use a = .05 to make the comparison.

Question: Deferred tax allowance study. A study was conducted to identify accounting choice variables that influence a manager’s decision to change the level of the deferred tax asset allowance at the firm (The Engineering Economist, January/February 2004). Data were collected for a sample of 329 firms that reported deferred tax assets in 2000. The dependent variable of interest (DTVA) is measured as the change in the deferred tax asset valuation allowance divided by the deferred tax asset. The independent variables used as predictors of DTVA are listed as follows:

LEVERAGE: x1= ratio of debt book value to shareholder’s equity

BONUS: x2 = 1 if firm maintains a management bonus plan,

0 if not

MVALUE: x3 = market value of common stock

BBATH: x4 = 1 if operating earnings negative and lower than last year,

0 if not

EARN: x5 = change in operating earnings divided by total assets

A first-order model was fit to the data with the following results (p-values in parentheses):

Ra2 = .280

y^=0.044+0.006x1-0.035x2-0.001x3+0.296x4+0.010x5

(.070) (.228) (.157) (.678) (.001) (.869)

  1. Interpret the estimate of the β coefficient for x4.
  2. The “Big Bath” theory proposed by the researchers’ states that the mean DTVA for firms with negative earnings and earnings lower than last year will exceed the mean DTVA of other firms. Is there evidence to support this theory? Test using α = .05.
  3. Interpret the value of Ra2.

Two populations are described in each of the following cases. In which cases would it be appropriate to apply the small-sample t-test to investigate the difference between the population means?

a.Population 1: Normal distribution with variance σ12. Population 2: Skewed to the right with varianceσ22=σ12.

b. Population 1: Normal distribution with variance σ12. Population 2: Normal distribution with variance σ22σ12.

c. Population 1: Skewed to the left with variance σ12. Population 2: Skewed to the left with varianceσ22=σ12.

d. Population 1: Normal distribution with varianceσ12 . Population 2: Normal distribution with varianceσ22=σ12 .

e. Population 1: Uniform distribution with varianceσ12 . Population 2: Uniform distribution with variance σ22=σ12.

Last name and acquisition timing. Refer to the Journal of Consumer Research (August 2011) study of the last name effect in acquisition timing, Exercise 8.13 (p. 466). Recall that the mean response times (in minutes) to acquire free tickets were compared for two groups of MBA students— those students with last names beginning with one of the first nine letters of the alphabet and those with last names beginning with one of the last nine letters of the alphabet. How many MBA students from each group would need to be selected to estimate the difference in mean times to within 2 minutes of its true value with 95% confidence? (Assume equal sample sizes were selected for each group and that the response time standard deviation for both groups is σ≈ 9 minutes.)

See all solutions

Recommended explanations on Math Textbooks

View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free