Durham Industries, Inc' Student Coaching Slides

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Durham Industries, Inc.Student Coaching Slides
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Question 1A 1B Histogram

• See Gateway web site for Excel steps
• Use tools/data analysis/histogram
• What proportion of Eastasia citizens have
  disposable incomes gt 1000 per month? Approximate
  answer is ok here.

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Question 1C Sample statistics

• See web site for Excel steps
• Use tools/data analysis/descriptive
  statistics/summary statistics
• Mean first line
• Standard deviation fifth line

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Question 1DHypothesis Testing

• Step 1 Ho Null hypothesis Eastasias claim
• Step 2 H1 or Ha Alternative hypothesis
  Oceanas claim
• (a) If Oceana wins the debate only when the
  population mean is less than 1000, H1 should be
  one-tail
• (b) Otherwise, H1 should be two-tail

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Hypothesis Testing (continued)

• Step 3 Critical Value
• (a) Determine which statistical table to use
• (b) If H1 is one-tail, put .05 in tail if H1
  is 2-tail, put .025 in each tail
• Step 4 Test Statistic Sample Statistic
• (a) Use sample mean and standard deviation from
  Question 1c
• (b) Use standard error of the mean

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Hypothesis Testing (continued)

• Step 5 Conclusion
• (a) If sample statistic (absolute value) exceeds
  critical value, reject Ho
• (b) Otherwise, do not reject Ho

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Question 2AIncome Variation

• Standard deviation measures variation
• If standard deviation 0, no variation, so each
  person has same income
• High standard deviation implies high variation

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Question 2BPoverty Level

• Use Z table (normal area table)
• Use standard deviation, NOT standard error since
  this is not a sampling distribution problem
• Question 2B has 2 calculations, one for Eastasia
  and the other for Oceana

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Question 2BSkewed Distribution

• If mean gt median, distribution is skewed
• Do you think mean gt median for income?
• Use normal table only if distribution is bell
  shaped
• Bell shaped only if symmetric
• Symmetric only if not skewed

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Question 3Hypothesis Testing

• Ho Population proportion 1/3 (Amnesty
  Internationals claim)
• Normal approximation to binomial
• H1 is one-tail if Minister of Commerce wins
  debate only when proportion is less than 1/3.
  Otherwise, it is two-tail
• Sample proportion number of political
  prisoners/sample size

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Questions 4 and 5Factors Determining GDP/Capita

• Physical Capital
• Human Capital
• Level of Technology
• Efficiency

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Question 5Ethical Considerations

• Who benefits and who loses from the firms
  decision?
• Who does the firm have a responsibility to?
• What are those responsibilities?

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