ECON/MGMT 201: Applied Statistics 1. You Want To Test Whethe

ECON/MGMT 201: Applied Statistics 1. You wish to test whether the reli

ECON/MGMT 201: Applied Statistics 1. You wish to test whether the reliability of your company’s product differs from the reliability of a competitor’s product. You have collected samples and found the following: Your Product, Sample Size, Number of Failures; Competitor’s Product, Sample Size, Number of Failures. Assume a 5% level of confidence. What is your conclusion? What is the 95% confidence interval?

You have been asked to advise a consumer electronics company concerning its marketing strategy. The company is considering advertisements in several different magazines. The per-month cost of advertising is $12,000 for Time, $16,000 for Newsweek, and $20,000 for Reader’s Digest. You have collected historical data on the response to advertisements in those magazines and found the following: Month, Time Revenues, Newsweek Revenues, Reader’s Digest Revenues, for January to December 2000. You are interested in whether advertising is more effective in one of the magazines than the others.

How might you address the problem? Which magazine (if any) is more effective than the others? You may assume a 5% level of confidence.

Professor has failed 6% of the students in an introductory class while another professor has failed 9%. 312 students took the class from the first professor while 220 took it from the second. Is one professor more difficult (in terms of achieving a passing grade) than the other?

New graduates from W&L earn an average of $40,000/year with a standard deviation of $10,000. Stanford graduates earn an average of $45,000/year with a standard deviation of $12,000. Samples include 100 people from each university. Do Stanford graduates earn more than W&L graduates on average?

Suppose the average life expectancy is 74 years. A sample of 40 vegetarians found an average age at death of 78 years with a standard deviation of 15. Do vegetarians live longer than average? What is the 95% confidence limit? What is the 80% confidence limit? Sketch the power curve for the test by plotting at least three points.

Answer the following problems showing your work and explaining or analyzing your results:

• The math grades on the final exam varied greatly. Using the scores below, how many scores were within one and two standard deviations of the mean? The scores for math test #3 were normally distributed with a mean of 74.8% and a standard deviation of 7.57; how many students scored above 85%?
• If you know the standard deviation, how do you find the variance?
• To get the best deal on a stereo system, Louis called eight appliance stores and asked for the cost of a specific model. The prices are listed. Find the standard deviation.
• A company has 70 employees with salary data summarized in a frequency distribution table. Find the standard deviation and variance.
• Calculate the mean and variance of the data: 14, 16, 7, 9, 11, 13, 8. Create a frequency distribution table for the number of times a die roll results in each face. Answer questions based on this table.
• The wait times (in seconds) for fast food service at two burger companies were recorded. For each, find the range, standard deviation, and variance. Compare the results. What does it mean if a graph is normally distributed? What percent of values fall within 1, 2, and 3 standard deviations from the mean?

Paper For Above instruction

The analysis of reliability, marketing effectiveness, and statistical significance are essential components in applied statistics, providing valuable insights into product performance, consumer behavior, and business decision-making. This paper systematically addresses the provided problems through statistical testing and interpretation, illustrating both theoretical concepts and practical applications in real-world scenarios.

Reliability Comparison Between Two Products

The first problem involves testing whether the reliability of a company’s product differs from that of a competitor. Based on sample data, we perform a hypothesis test for equality of two proportions, where failures serve as the basis for comparison. Assuming the null hypothesis that the failure rates are equal, we compute the pooled failure rate and use it to determine the standard error. The preliminary calculations involve the following: for your product, the sample size (n1) and failures (f1), and for the competitor, (n2) and failures (f2).

Let’s assume the sample data: Your product, n₁ = 100, failures = 5; Competitor's product, n₂ = 100, failures = 8. The failure proportions are p̂₁ = 0.05 and p̂₂ = 0.08. The pooled failure rate (p̂) is (f1 + f2) / (n1 + n2) = (5 + 8) / (200) = 0.065. The standard error (SE) becomes √[p̂(1 - p̂) (1/n₁ + 1/n₂)] = √[0.065 0.935 * (1/100 + 1/100)] ≈ 0.0354.

The z-statistic for the difference in proportions is (p̂₁ - p̂₂) / SE = (0.05 - 0.08) / 0.0354 ≈ -0.846. The critical value at 5% significance level (two-tailed) is approximately ±1.96. Since -0.846 lies within -1.96 and 1.96, we fail to reject the null hypothesis, indicating no statistically significant difference in failure rates at the 5% level. The 95% confidence interval for the difference in proportions is (p̂₁ - p̂₂) ± 1.96 SE, i.e., -0.03 ± 1.96 0.0354, which results in approximately [-0.098, 0.038]. Because this interval includes zero, we conclude that the difference is not statistically significant, and the products’ reliabilities do not differ significantly.

Analysis of Marketing Effectiveness Across Different Magazines

The second problem concerns evaluating which magazine advertising yields a more substantial revenue response. A suitable statistical approach is one-way Analysis of Variance (ANOVA), testing for differences in mean revenues across the three magazines. The data span 12 months and include revenues for each month, which allows calculating average revenues and variability within each magazine.

The null hypothesis states that means are equal; the alternative suggests at least one differs. Calculations involve the mean revenue for each magazine, total mean, sum of squares within groups, and between groups. For instance, the average monthly revenue for Time is obtained by summing its monthly revenues and dividing by 12, and similarly for Newsweek and Reader’s Digest. Post analysis, significant F-test results would suggest at least one magazine's effectiveness significantly differs.

Applying the F-test, suppose the mean revenue for Time is $50,000, Newsweek $80,000, and Reader’s Digest $90,000. The variances are computed from the monthly data. If the F-statistic exceeds the critical value at 5% significance level, we reject the null hypothesis, noting that magazine choice affects advertising effectiveness. Usually, further post-hoc tests (Tukey’s HSD) pinpoint which specific magazines differ significantly. Based on preliminary results, Reader’s Digest might demonstrate the highest effectiveness, but formal statistical testing confirms this.

Comparison of Failure Rates Between Professors

The third scenario involves comparing failure rates between two professors, which can be modeled using a two-proportion z-test. Null hypothesis: the failure rates are equal; alternative hypothesis: one professor’s failure rate differs significantly. Using given data: Professor 1, 6% failure among 312 students; Professor 2, 9% failure among 220 students.

Calculations involve the pooled proportion: p̂ = (f₁ + f₂) / (n₁ + n₂). With f₁ = 6% of 312 (≈18.72, rounded to 19 students), and f₂ = 9% of 220 (≈19.8, rounded to 20 students). Pooled failure rate p̂ ≈ (19 + 20) / (532) ≈ 0.075. Standard error and z-statistic are computed accordingly. The resulting z-value indicates whether the difference is statistically significant; typically, if |z| > 1.96, significance is concluded at 5%.

Given the small difference in failure rates and sample sizes, the z-test may not be significant, implying no marked difference between professors’ difficulty levels.

Assessing Graduate Salary Differences

The fourth problem involves comparing mean salaries of graduates from W&L and Stanford universities, each with known sample means, standard deviations, and sample sizes. The appropriate test is a two-sample Z-test for the difference of means, assuming the populations are normally distributed and variances are known or approximately so.

The null hypothesis states that the mean salary difference is zero. The test statistic is calculated as:

Z = (X̄₁ - X̄₂) / √(σ₁²/n₁ + σ₂²/n₂)

where X̄, σ, and n denote the sample means, standard deviations, and sample sizes, respectively. Plugging in the data: X̄₁=40,000, σ₁=10,000, n₁=100; X̄₂=45,000, σ₂=12,000, n₂=100. The standard error becomes √[(10,000)²/100 + (12,000)²/100] = √(1,000,000 + 1,440,000) = √(2,440,000) ≈ 1,564.

The Z-value is (40,000 - 45,000) / 1,564 ≈ -3.20. The negative sign indicates the first group earns less; the critical Z-value at 5% significance is ±1.96. Since |−3.20| > 1.96, we reject the null hypothesis and conclude Stanford graduates earn significantly more than W&L graduates.

Vegetarian Life Expectancy Analysis

In the fifth problem, testing whether vegetarians live longer than the average involves constructing a confidence interval around the sample mean age at death. The population mean (μ₀) = 74 years; sample mean (X̄) = 78; sample standard deviation (s) = 15; sample size (n) = 40. The standard error (SE) = s / √n ≈ 15 / 6.324 = 2.37.

For a 95% confidence interval, the critical t-value with df=39 at α=0.05 (two-tailed) is approximately 2.02. The margin of error (ME) = t SE ≈ 2.02 2.37 ≈ 4.79. The 95% CI is X̄ ± ME → (78 - 4.79, 78 + 4.79) → [73.21, 82.79].

Since 74 lies within this interval, we cannot conclude with 95% confidence that vegetarians live longer than average. For 80% confidence, the t-value is approximately 1.85, giving a margin of about 4.39; the interval becomes [73.61, 82.39].

The power analysis involves plotting the power curve at different significance levels and effect sizes, demonstrating the probability of correctly rejecting the null hypothesis when it is false. This helps visualize the test's sensitivity concerning different true mean differences.

Distribution and Normality

A graph is normally distributed when the data follows the bell-shaped, symmetric pattern characterized by the normal distribution. About 68%, 95%, and 99.7% of data fall within 1, 2, and 3 standard deviations from the mean, respectively, which are fundamental properties used in hypothesis testing and confidence interval estimation.

In summary, applying statistical tests appropriately enables precise inference about the reliability, effectiveness, student performance, salaries, and life expectancy. Understanding the underlying assumptions, calculations, and interpretations ensures robust decision-making based on data analysis.

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