Durham Industries, Inc. Student Coaching Slides

Question 1A & 1B: Histogram See Gateway web site for Excel steps Use tools/data analysis/histogram What proportion of Eastasia citizens have disposable incomes > $1000 per month? Approximate answer is ok here.

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

Question 1D: Hypothesis Testing Step 1: H o : Null hypothesis = Eastasia’s claim Step 2: H 1 or H a : Alternative hypothesis = Oceana’s claim (a) If Oceana wins the debate only when the population mean is less than $1000, H 1 should be one-tail (b) Otherwise, H 1 should be two-tail

Hypothesis Testing (continued) Step 3: Critical Value (a) Determine which statistical table to use (b) If H 1 is one-tail, put.05 in tail; if H 1 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

Hypothesis Testing (continued) Step 5: Conclusion (a) If sample statistic (absolute value) exceeds critical value, reject H o (b) Otherwise, do not reject H o

Question 2A: Income Variation Standard deviation measures variation If standard deviation = 0, no variation, so each person has same income High standard deviation implies high variation

Question 2B: Poverty 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

Question 2B: Skewed Distribution If mean > median, distribution is skewed Do you think mean > median for income? Use normal table only if distribution is bell shaped Bell shaped only if symmetric Symmetric only if not skewed

Question 3: Hypothesis Testing H o : Population proportion = 1/3 (Amnesty International‘s claim) Normal approximation to binomial H 1 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

Questions 4 and 5: Factors Determining GDP/Capita Physical Capital Human Capital Level of Technology Efficiency

Question 5: Ethical Considerations Who benefits and who loses from the firm’s decision? Who does the firm have a responsibility to? What are those responsibilities?