Zakir Husain Delhi College
ASSIGNMENT
Name: Mohammad Atif Reyan
Roll No.: 23/1700
Course: B. Com (Hons.)
Section: A
Subject Name: Basic Statistics for Economics
Subject Code: 2274001202
Question 1:
A random sample of size 10 was drawn from a normal population with an unknown
mean and variance of 44.1 (inch)^2.
If the observations are (in inches): 65, 71, 80, 76, 78, 82, 68, 72, 65 & 81.
-> Obtain 95% Confidence Interval for the population mean µ.
Answer:
• Sample size 𝓃 = 10
• Population Variance σ2 = 44 (inch)^2
• Population std. deviation σ = √44.1 = 6.6408 inches
• Observations: 65, 71, 80, 76, 78, 82, 68, 72, 65, 81
• Confidence Level 95%
1. Since the population is normal and the population variance σ² is known, we
use the Z-statistic (Standard Normal Distribution).
𝑀𝑒𝑎𝑛− µ
𝓏= ~ N (0,1)
σ/√ 𝑛
2. Calculate the Sample Mean:
∑ 𝓍 = 65+71+80+76+78+82+68+72+65+81
∑ 𝓍 =738
Sample size 𝓃 = 10
𝓍
Mean = ∑
𝓃
738
= = 73.8 inches
10
3. Finding the Critical Value (Z 𝛼 /2) 𝛼
For a 95% Confidence Interval:
𝛼 = 1−0.95 = 0.05
𝛼
= 0.025
2
From the Standard Normal Table:
Z 𝛼 /2 = Z 0.025 = 1.96
(This is the value such that P (Z ≤ 1.96) = 0.975)
4. Calculate the Standard Error (S.E.)
σ √44.1 44.1
S.E = = = √ = √4.41 = 2.1
√𝑛 √10 10
5. Calculate the Margin of Error (E)
E = Zα/2×S.E.
E = 1.96×2.1
E = 4.116
6. Construct the 95% Confidence Interval:
Formula:
𝑍𝛼 𝜎 𝑍𝛼 𝜎
(𝑀𝑒𝑎𝑛 − ⋅ , 𝑀𝑒𝑎𝑛 + ⋅ )
2 √𝓃 2 √𝓃
Lower Limit:
Mean – E = 73.8−4.116 = 69.684
Upper Limit:
Mean + E = 73.8+4.116 = 77.916
7. Result:
69.684 ≤ 𝜇 ≤ 77.916
Interpretation: We are 95% confident that the true population mean height µ lies between
69.684 inches and 77.916 inches.
Question 2:
The breaking strength (in kgs) of climbing ropes is normally distributed with mean µ and
Standard deviation σ.
Five specimens of climbing rope were found to possess breaking strength of:
660, 460, 540, 580, & 550.
-> Obtain 95% Confidence Interval for µ.
Answer:
• Sample size 𝓃 = 5
• Population Variance σ = Unknown
• Observations: 660, 460, 540, 580, 550
• Confidence Level: 95%
1. Since the population is normal but the population variance σ² is unknown,
we cannot use the Z-statistic.
Instead, we use the t-statistic (Student's t-Distribution):
𝑀𝑒𝑎𝑛− µ
𝓉= ~ 𝓉 (n-1)
s/√ 𝑛
where s is the sample standard deviation and (n−1) are the degrees of
freedom.
2. Calculate the Sample Mean:
∑ 𝓍 = 660 + 460 + 540 + 580 + 550 = 2790
2790
Mean = = 558 kgs
5
3. Calculate the Sample Variance (s²)
∑(𝑋𝑖−𝑀𝑒𝑎𝑛)^2
s² =
𝑛−1
Xi Xi - Mean (Xi−Mean) ^2
660 660 − 558 = +102 10404
460 460 − 558 = −98 9604
540 540 − 558 = −18 324
580 580 − 558 = +22 484
550 550 − 558 = −8 64
Total 0 20880
20880 20880
s² = = = 5220 kgs2
5−1 4
4. Calculate the Sample Standard Deviation (s):
s = √5220 = 72.25 kgs
(Since √5220 = √ (4 × 1305) = 2√1305 ≈ 2 × 36.124 = 72.25)
5. Calculate the Standard Error (S.E.)
𝑠 72.25 72.25
S.E. = = = = 32.31 kgs
√𝑛 √5 2.2361
𝓉𝛼
6. Find the Critical Value ( , 𝑛 − 1)
2
For a 95% Confidence Interval:
𝛼
𝛼 = 0.05, = 0.025
2
Degrees of freedom = 𝓃 − 1 = 5 − 1 = 4
From the t-Distribution Table:
𝑡𝛼
, 𝑛 − 1 = 𝑡0.025, 4 = 2.776
2
7. Calculate the Margin of Error (E):
𝑡𝛼
, 𝑛 − 1 × 𝑆. 𝐸.
2
E= 2.776 ×32.31
E = 89.69 kgs
8. Construct the 95% Confidence Interval:
Formula:
𝑡𝛼 8 𝑡𝛼 8
(𝑀𝑒𝑎𝑛 − , 𝑛−1 ⋅ , 𝑀𝑒𝑎𝑛 + , 𝑛−1 ⋅ )
2 √𝑛 2 √𝑛
Lower Limit:
Mean – E = 558 - 89.69 = 468.31
Upper Limit:
Mean – E = 558 + 89.69 = 647.69
9. Result:
468.31 ≤ 𝜇 ≤ 647.69
Interpretation: We are 95% confident that the true population mean breaking strength µ of
climbing ropes lies between 468.31 kgs and 647.69 kgs.
Question 3:
(a) What do you understand by Confidence Interval?
(b) What level of confidence would be associated with each of the following intervals?
σ
1. Mean – 1.645 , Mean
√𝑛
σ σ
2. Mean – 2.33 , Mean +1.645
√𝑛 √𝑛
σ
3. − 𝛼 , Mean + 2.58
√𝑛
Assume that the random variable x is normally distributed; and the population variance
σ2 is known ; and a sample of size n has mean equal to Mean.
Answer:
(a) A Confidence Interval (C.I.) is a range of values, derived from sample data, that
is likely to contain the true value of an unknown population parameter (such as
µ) with a specified degree of certainty called the confidence level.
Formal Definition:
If Mean is the sample mean, then a confidence interval for population mean µ is
expressed as:
𝑍𝛼 σ 𝑍𝛼 σ
𝑃 ( 𝑀𝑒𝑎𝑛 − ⋅ ≤ 𝜇 ≤ 𝑀𝑒𝑎𝑛 + ⋅ )=1− 𝛼
2 √𝑛 2 √𝑛
Where:
• (1 − 𝛼) = Confidence Level
• 𝛼 = Level of Significance
𝑍𝛼
• = Critical value from Standard Normal Table
2
σ
• = Standard Error of the mean
√𝑛
(b) Level of Confidence for Each Interval
Setup & Logic
Since X is normally distributed and σ² is known, the standardized variable is:
𝑀𝑒𝑎𝑛 − 𝜇
𝑍= σ ~ 𝑁(0,1)
√𝑛
We write the C.I. as:
𝑍𝛼 𝑍𝛼
𝑃(𝐿 ≤ 𝜇 ≤ 𝑈) = 𝑃 ( − ≤𝑍≤ + )= 1− 𝛼
2 2
For each interval below, we identify the Z-values, then find the corresponding
probability from the Standard Normal Table.
Interval 1:
σ
(𝑀𝑒𝑎𝑛 − 1.645 , 𝑀𝑒𝑎𝑛)
√𝑛
This is a one-sided interval — it extends from the lower bound up to the mean only.
Rewriting in probability form:
σ
𝑃 (𝑀𝑒𝑎𝑛 − 1.645 ≤ 𝜇 ≤ 𝑀𝑒𝑎𝑛)
√𝑛
Converting to Z:
= P (−1.645 ≤ Z ≤ 0)
= P (Z ≤ 0) – P (Z ≤ −1.645)
= 0.5000 − 0.0500
= 0.5000 − (1 − 0.9500)
From Standard Normal Table:
𝑷(−𝟏. 𝟔𝟒𝟓 ≤ 𝒁 ≤ 𝟎) = 𝟎. 𝟓 − 𝟎. 𝟎𝟓 = 𝟎. 𝟒𝟓
Level of Confidence = 45%
Interval 2:
σ σ
𝑀𝑒𝑎𝑛 − 2.33 , 𝑀𝑒𝑎𝑛 + 1.645
√𝑛 √𝑛
This is an asymmetric two-sided interval.
Converting to Z:
𝑃(−2.33 ≤ 𝑍 ≤ +1.645)
= 𝑃(𝑍 ≤ +1.645) − 𝑃(𝑍 ≤ −2.33)
From Standard Normal Table:
𝑃(𝑍 ≤ +1.645) = 0.9500
𝑃(𝑍 ≤ −2.33) = 1 − 𝑃(𝑍 ≤ +2.33) = 1 − 0.9901 = 0.0099
= 0.9500 − 0.0099 = 0.9401
Level of Confidence = 94.01% approx. 94%
Interval 3:
σ
−𝛼 , Mean + 2.58
√𝑛
Here −α on the left means the lower limit extends to −∞ (i.e., no lower bound
is specified — it is a one-sided upper interval).
Converting to Z:
𝑃(−∞ ≤ 𝑍 ≤ +2.58)
𝑃( 𝑍 ≤ 2.58) = 0.9951
Level of Confidence = 99.51% approx. 99.5%
Question 4:
An automatic machine was designed to pack exactly 2.0 kg of vegetable oil. A sample of
100 tons was examined to test the machine. The average weight was found to be 1.94 kg
with Standard deviation 0.10 kg. Is the machine working properly?
(i) Construct Null Hypothesis against Alternative Hypothesis.
(ii) What are your Test Statistics?
(iii) Will you reject the Null Hypothesis at 5% level of significance (i.e., 𝛼 = .05) ?
(iv) On the basis of the above Test, what is your conclusion about the machine?
Answer:
Parameter Value
Designed fill weight µ₀ = 2.0 kg
Sample Size n = 100
Sample Mean Mean = 1.94 kg
Sample std. deviation s = 0.10 kg
Level of significance α = 5% = 0.05
Part (i): Null Hypothesis vs Alternative Hypothesis:
The machine is designed to pack exactly 2.0 kg — so we test whether the true mean
equals this designed value.
𝐻0 ∶ 𝜇 = 2.0 𝑘𝑔
(The machine is working properly — mean fill = 2.0 kg)
𝐻1 ∶ 𝜇 ≠ 2.0 𝑘𝑔
(The machine is NOT working properly — mean fill ≠ 2.0 kg)
Since we are testing for deviation in either direction (over-filling or under-filling), this is a
Two-Tailed Test.
Part (ii): Test Statistic:
Since the population variance is unknown but n = 100 (large sample), we use the Z-test
and substitute s for σ:
𝑀𝑒𝑎𝑛 − 𝜇0
𝑍= 𝑠
√𝑛
Substituting the values:
1.94 − 2.0
𝑍=
0.10
√ 100
Denominator (Standard Error):
𝑠 0.10 0.10
𝑆. 𝐸 = = = = 0.01
√n √100 10
Numerator:
𝑀𝑒𝑎𝑛 − 𝜇0 = 1.94 − 2.0 = −0.06
Therefore:
−0.06
𝑍= = −6
0.01
Z calculated = 6
Part (iii): Decision Rule at 5% Level of Significance:
Critical Value for Two-Tailed Test:
𝛼
𝛼 = 0.05, = 0.025
2
From the Standard Normal Table:
𝛼
𝑍 = 𝑍 0.025 = 1.96
2
The Decision Rule is:
𝛼
𝑅𝑒𝑗𝑒𝑐𝑡 𝐻0 𝑖𝑓 𝑍 𝑐𝑎𝑙𝑐𝑢𝑙𝑎𝑡𝑒𝑑 > 𝑍
2
𝛼
𝐷𝑜 𝑁𝑂𝑇 𝑅𝑒𝑗𝑒𝑐𝑡 𝐻0 𝑖𝑓 𝑍 𝑐𝑎𝑙𝑐𝑢𝑙𝑎𝑡𝑒𝑑 < 𝑍
2
Comparison:
Value
Z calculated 6.00
𝛼 1.96
𝑍 (𝐶𝑟𝑖𝑡𝑖𝑐𝑎𝑙 𝑉𝑎𝑙𝑢𝑒)
2
Decision 6.00 > 1.96
𝛼
𝑆𝑖𝑛𝑐𝑒 ∣ 𝑍 𝑐𝑎𝑙 ∣= 6 > 𝑍 = 1.96, 𝑤𝑒 𝑅𝐸𝐽𝐸𝐶𝑇 𝐻0
2
Part (iv): Conclusion
Since the calculated value of Z = −6 far exceeds the critical value of ±1.96, we reject the
Null Hypothesis H₀ at the 5% level of significance.
- The machine is NOT working properly.
The sample mean of 1.94 kg is significantly different from the designed weight of 2.0 kg.
The difference of 0.06 kg (60 grams) is not due to random chance — it is statistically
significant.
The machine is consistently under-filling the packs by 60 grams on average. The
management should:
1. Immediately inspect and recalibrate the machine
2. Investigate whether this is a mechanical fault or calibration error