Sample 1

Question 1. Let ][
2 1
A= .
1 2
Find A−1 .

Question 2. Let  
1 1 2
B = 0 1 1  .
1 0 2
Find B −1 .

Question 3. A financial analyst estimates that the probability the economy will expe-
rience a recession in the next 12 months is 25%. She also believes that if the economy
encounters a recession, the probability that her mutual fund will increase in value is 20%.
If there is no recession, the probability that the mutual fund will increase in value is 75%.
Find the probability that the mutual funds value will increase.

Question 4. A university found that 20% of its students withdraw without completing
the introductory statistics course. Assume that 20 students registered for the course.

1. Compute the probability that two or fewer will withdraw.

2. Compute the probability that exactly four will withdraw.

Question 5. A random sample of 16 junior managers in offices of corporations in a

large city center was taken to estimate the average daily commuting time for all such
managers. Suppose the population times are normally distributed with mean 87 minutes
and standard deviation 22 minutes. What is the probability that the sample mean is
more than 80 minutes?

Question 6. Suppose a market-research firm is hired to estimate the percent of adults

living in a large city who have cell phones. Five hundred randomly selected adult residents
in this city are surveyed to determine whether they have cell phones. Of the 500 people
surveyed, 421 responded yes they own cell phones.

1. Using a 95% confidence level, compute a confidence-interval estimate for the true
proportion of adult residents of this city who have cell phones.

2. At the 98% confidence level, what is the margin of error?

Question 7. Given the demand functions and the cost function

P1 = 20 − 2Q1 , P2 = 30 − Q2 , T C = Q21 + 2Q1 Q2 + Q22 + 20,

find the profit function in terms of Q1 , Q2 . Determine the values of Q1 , Q2 that maximize
profit.
Question 8. Three customers enter a bank with eight service counters numbered 1
to 8. The customers do not know each other and do not communicate. Calculate the
probability that at least two of the three customers go to the same counter if the three
customers choose only among the odd-numbered counters.

* Critical values for the standard normal distribution:

z0.05 = 1.645, z0.025 = 1.96, z0.01 = 2.33, z0.005 = 2.58.

End of Test

Solution 1.
Solution
( )
2 1
A= , det A = 2 · 2 − 1 · 1 = 3 ̸= 0.
1 2
( )
−1 1 1 2 −1
A = adj(A) = .
det A 3 −1 2
( 2 )
−1 3
− 13
A = .
− 13 32

Solution 2.
Solution
GaussJordan on [B | I]:
   
1 1 2 1 0 0 1 1 2 1 0 0
R3 ←R3 −R1
 0 1 1 0 1 0  − −−−−−−→  0 1 1 0 1 0 
1 0 2 0 0 1 0 −1 0 −1 0 1
 
1 1 2 1 0 0
R3 ← R3 + R2 :  0 1 1 0 1 0 
0 0 1 −1 1 1
Eliminate above pivots:

R1 ← R1 − 2R3 : [1 1 0 | 3 − 2 − 2],
R2 ← R2 − R3 : [0 1 0 | 1 0 − 1],
R1 ← R1 − R2 : [1 0 0 | 2 − 2 − 1].

Thus  
2 −2 −1
B −1 = 1 0 −1 .
−1 1 1

Solution 3.

Page 2
 Solution

Let A: recession, B: fund increases. Given P (A) = 0.25, P (B|A) = 0.20, P (B|A) =
0.75.

P (B) = P (A)P (B|A) + P (A)P (B|A) = 0.25(0.20) + 0.75(0.75) = 0.6125.

P (fund increases) = 0.6125 (61.25%).

Solution 4.
Solution
Let X ∼ Bin(n = 20, p = 0.2).

∑
2
(a) P (X ≤ 2) = Ck20 (0.2)k (0.8)20−k = 0.2060.
k=0

(b) P (X = 4) = C420 (0.2)4 (0.8)16 = 0.2182.

P (X ≤ 2) = 0.2060, P (X = 4) = 0.2182.

Solution 5.
Solution
Population normal with µ = 87, σ = 22, n = 16.
( 22 )
X ∼ N 87, √ = N (87, 5.5).
16
( )
80 − 87
P (X > 80) = F (+∞) − F = 1 − F (−1.27) ≈ 1 − 0.1020 = 0.8980.
5.5

P (X > 80) ≈ 0.8980.

Solution 6.

Page 3
 Solution
√ √
421 p̂(1 − p̂) 0.842 · 0.158
p̂ = = 0.842, SE = = ≈ 0.0163.
500 n 500
(a) 95% CI (z0.025 = 1.96):

p̂ ± z SE = 0.842 ± 1.96(0.0163) = (0.810, 0.874).

(b) Margin at 98% (z0.01 = 2.33):

ME = 2.33 × 0.0163 ≈ 0.0380 (3.80%).

CI95% = (0.810, 0.874), ME98% ≈ 0.0380.

Solution 7.
Solution
Revenue:

R(Q1 , Q2 ) = P1 Q1 +P2 Q2 = (20−2Q1 )Q1 +(30−Q2 )Q2 = 20Q1 −2Q21 +30Q2 −Q22 .

Cost: T C = Q21 + 2Q1 Q2 + Q22 + 20.

Profit:

π = R − T C = 20Q1 − 3Q21 + 30Q2 − 2Q22 − 2Q1 Q2 − 20.

First-order partial derivatives:

∂π ∂π
= 20 − 6Q1 − 2Q2 = 0, = 30 − 4Q2 − 2Q1 = 0.
∂Q1 ∂Q2

Second-order partial derivatives (Hessian entries):

A = πQ1 Q1 = −6, B = πQ1 Q2 = −2, C = πQ2 Q2 = −4.

{
6Q1 + 2Q2 = 20
Solve ⇒ Q1 = 1, Q2 = 7. Since D = AC − B 2 = (−6)(−4) −
2Q1 + 4Q2 = 30
(−2) = 24 − 4 = 20 > 0 and A = −6 < 0, this critical point is a maximum.
2

Compute the maximum profit:

πmax = π(1, 7) = 20(1) − 3(1)2 + 30(7) − 2(7)2 − 2(1)(7) − 20 = 95.

Q∗1 = 1, Q∗2 = 7, πmax = 95.

Solution 8.

Page 4
Solution

Odd counters: {1, 3, 5, 7} (4 choices). Independent choices ⇒ total outcomes 43 =

64.
All three different: 4 · 3 · 2 = 24 outcomes.
24 5
P (at least two same) = 1 − = 1 − 0.375 = 0.625 = .
64 8

P = 0.625.

Page 5
Sample 2
Question 1. Let  
1 1 1 1
A = 0 1 1 2  .
2 3 3 3
Find the rank of A.

Question 2. The inputoutput matrix for a 3-sector economy is

   
0.4 0.1 0.2 40
C = 0.2 0.3 0.2 , D =  40  .
0.1 0.4 0.3 110
Find the total outputs of the three sectors needed to satisfy total demand.

Question 3. A college finds that 10% of students have taken a distance-learning class
and that 40% of students are part-time students. Of the part-time students, 20% have
taken a distance-learning class.
(a) Find the probability that a student is a part-time student and has taken a distance-
learning class.
(b) Determine whether the two events being a part-time student and having taken a
distance-learning class are independent.

Question 4. We are given the following probability distribution:

X 0 1 2 3
P (X) 0.4 0.3 0.2 0.1
(a) Calculate the variance and standard deviation of X.
(b) Suppose that Y = 2X + 1. What are the possible values of Y ? Compute the mean
of Y .

Question 5. According to a study conducted by De Anza students, the heights of Asian

adult males are normally distributed with mean 66 inches and standard deviation 2.5
inches. Suppose one Asian adult male is randomly chosen. Let X be the height of the
individual.
(a) Fill in the blanks: X ∼ . . . (. . . , . . .)
(b) Find the probability that the person is over 72 inches tall. Would you expect to
meet many Asian adult males over 72 inches?

Question 6. A statistics practitioner calculated the mean and standard deviation from
a sample of 51. They are x̄ = 68.4 and s = 4.7. Estimate the population mean with 95%
confidence.

Question 7. A student polls her school to see if students in the school district are for
or against new legislation regarding school uniforms. She surveys 600 students and finds
that 480 are against the legislation.

Page 6
 (a) Compute a 90% confidence interval and margin of error for the true percent of
students who are against the new legislation.

(b) In a sample of 300 students, 68% said they own an iPod and a smartphone. Com-
pute a 95% confidence interval for the true percent of students who own both.

Question 8. Given the utility function

U = 3x0.7 y 0.3 ,

find the second-order partial derivative Uxy .

Find the maximum value of the utility subject to the budget constraint 7x+3y = 200.

* Critical values for the standard normal distribution:

z0.05 = 1.645, z0.025 = 1.96, z0.01 = 2.33, z0.005 = 2.58.

End of Test

Solution 1.
Solution
Row-reduce to find rank(A):
     
1 1 1 1 1 1 1 1 1 1 1 1
←R −2R1 ←R3 −R2
 0 1 1 2  −R −3−−−3−−−→  0 1 1 2  −R−3−−−−−→  0 1 1 2  .
2 3 3 3 0 1 1 1 0 0 0 −1

There are 3 pivots, hence rank(A) = 3.

Solution 2.
Solution

In the Leontief inputoutput model, X = (I − C)−1 D.

 
0.6 −0.1 −0.2
I − C = −0.2 0.7 −0.2 .
−0.1 −0.4 0.7

Hence


200
X = 200 .
300
Hence, the total outputs of the three sectors are 200, 200, and 300.

Solution 3.

Page 7
 Solution
Let D: has taken a distance-learning class, P : is a part-time student. Given
P (D) = 0.10, P (P ) = 0.40, P (D | P ) = 0.20.
(a)
P (P ∩ D) = P (P )P (D | P ) = 0.40 × 0.20 = 0.08.
(b) To check independence:

P (P )P (D) = 0.40 × 0.10 = 0.04 ̸= 0.08 = P (P ∩ D).

Not independent.

Solution 4.
Solution
Compute expectations:

E[X] = 0(0.4) + 1(0.3) + 2(0.2) + 3(0.1) = 1,

E[X 2 ] = 0(0.4) + 1(0.3) + 4(0.2) + 9(0.1) = 2.

(a)
Var(X) = E[X 2 ] − E[X]2 = 2 − 12 = 1, SD(X) = 1.
(b) Since Y = 2X + 1 ⇒ Y ∈ {1, 3, 5, 7},

E[Y ] = 2E[X] + 1 = 2(1) + 1 = 3.

Var(X) = 1, SD(X) = 1; Y ∈ {1, 3, 5, 7}, E[Y ] = 3.

Solution 5.
Solution

(a) X ∼ N (66, 2.52 ).

(b)
72 − 66
Z= = 2.4, P (X > 72) = F (+∞) − F (2.4) ≈ 0.0082.
2.5
This is very rare (≈ 0.82%).

P (X > 72) ≈ 0.0082 (very few such individuals).

Solution 6.

Page 8
 Solution
4.7
n = 51, x̄ = 68.4, s = 4.7, SE = √ = 0.658. Using t0.025,50 = 2.009:
51
x̄ ± t SE = 68.4 ± 2.009(0.658) = (67.08, 69.72).

µ ∈ (67.08, 69.72) at 95% confidence.

Solution 7.
Solution
√
480 0.8(0.2)
(a) p̂ = = 0.80, SE = = 0.01633. For z0.05 = 1.645:
600 600
CI90% : 0.80 ± 1.645(0.01633) = (0.773, 0.827), ME = 0.0269.
√
0.68(0.32)
(b) p̂ = 0.68, n = 300, SE = = 0.02693. For z0.025 = 1.96:
300
CI95% : 0.68 ± 1.96(0.02693) = (0.627, 0.733).

(a) (0.773, 0.827), ME = 0.0269; (b) (0.627, 0.733).

Solution 8.
Solution

Given U = 3x0.7 y 0.3 .

Mixed second derivative:

Ux = 3(0.7)x−0.3 y 0.3 = 2.1x−0.3 y 0.3

∂
⇒ Uxy = Ux = 2.1(0.3)x−0.3 y −0.7 = 0.63x−0.3 y −0.7 .
∂y
Maximize utility subject to 7x + 3y = 200. We have

0.7(200) 0.3(200)
x∗ = = 20, y∗ = = 20.
7 3
Maximum utility:
U ∗ = 3(20)0.7 (20)0.3 = 3 × 20 = 60.
x∗ = 20, y ∗ = 20, U ∗ = 60.

Page 9
Sample 3
Question 1. Solve the following system of linear equations:


2x + 3y + z + 2t = 3,

4x + 6y + 3z + 4t = 5,

 6x + 9y + 5z + 6t = 7,


8x + 12y + 6z + 8t = 9.

Question 2. In a campus restaurant, it was found that 35% of all customers order
vegetarian meals and that 50% of all customers are students. Further, 25% of all cus-
tomers who are students order vegetarian meals. If a randomly chosen customer orders
a vegetarian meal, what is the probability that the customer is not a student?

Question 3. According to a Gallup poll, 27% of American adults have confidence in

banks. Suppose that you interview 5 American adults at random.

(a) What is the probability that 2 or fewer have confidence in banks?

(b) What is the probability that no one has confidence in banks?

Question 4. The top-selling Red and Voss tire is rated 70,000 miles, which means noth-
ing. In fact, the distance the tires can run until they wear out is a normally distributed
random variable with mean 82,000 miles and standard deviation 6,400 miles.

(a) What is the probability that a tire wears out before 70,000 miles?
(b) What is the probability that a tire lasts more than 100,000 miles?

Question 5. A survey of 611 office workers investigated telephone-answering practices,

including how often each worker was able to answer incoming calls and how often calls
went directly to voicemail. A total of 281 workers indicated that they never need voicemail
and are able to take every telephone call. What is the 95% confidence interval for the
proportion of office workers who are able to take every telephone call?

Question 6. You conduct a study of hypnotherapy to determine how effective it is in

increasing the number of hours of sleep subjects get each night. You measure hours of
sleep for 12 subjects with the following results:

8.2, 9.1, 7.7, 8.6, 6.9, 11.2, 10.1, 9.9, 8.9, 9.2, 7.5, 10.5.

(a) Construct a 95% confidence interval for the mean number of hours slept for the
population (assumed normal) from which the data were taken.
(b) At 90% confidence, what is the width of the confidence interval?

Question 7. Given the revenue function

R = Q1 Q2 + Q21 + 500,

Page 10
 (a) Estimate the change in revenue when Q1 increases from 100 to 101 and Q2 decreases
from 200 to 198.

(b) Find the maximum value of the revenue subject to the budget constraint 12Q1 +
4Q2 = 800.

* Critical values for the standard normal distribution:

z0.05 = 1.645, z0.025 = 1.96, z0.01 = 2.33, z0.005 = 2.58.

End of Test

Solution 1.
Solution
Augmented matrix and row reduction:
   
2 3 1 2 3 2 3 1 2 3
 4 6 3 4 5  ←R2 −2R1 , R3←R3 −3R1 , R4←R4 −4R1  0 0 1 0 −1 
  −R−2−−−−−−−−−−−−−−−−−−−−−−→  
 6 9 5 6 7   0 0 2 0 −2 
8 12 6 8 9 0 0 2 0 −3
 
2 3 1 2 3
 0 0 1 0 −1 
R3 ← R3 − 2R2 , R4 ← R4 − 2R2 ⇒ 
 0
.
0 0 0 0 
0 0 0 0 −1
The last row reads 0 = −1, a contradiction.
Hence the system is inconsistent (no solution) . Moreover, rank(A) = 2 while
rank([A|b]) = 3, confirming inconsistency.

Solution 2.
Solution
Let V : orders vegetarian; S: is a student. Given P (V ) = 0.35, P (S) = 0.50, P (V |
S) = 0.25.
0.125
P (S ∩ V ) = P (S)P (V | S) = 0.50 · 0.25 = 0.125, P (S | V ) = = 0.357.
0.35

P (S | V ) = 1 − 0.357 = 0.643 (about 64.3%).

Solution 3.

Page 11
 Solution
Let X ∼ Bin(n = 5, p = 0.27).

∑
2
(a) P (X ≤ 2) = Ck5 (0.27)k (0.73)5−k = 0.6277.
k=0

(b) P (X = 0) = (0.73)5 = 0.2073.

P (X ≤ 2) = 0.6277, P (X = 0) = 0.2073.

Solution 4.
Solution

Let X ∼ N (82,000, 6,4002 ).

(a)
70,000 − 82,000
Z= = −1.875 ⇒ P (X < 70,000) = F (−1.875) ≈ 0.0304.
6,400

(b)
100,000 − 82,000
Z= = 2.8125 ⇒ P (X > 100,000) = 1 − F (2.8125) ≈ 0.0025.
6,400

P (X < 70,000) ≈ 0.0304, P (X > 100,000) ≈ 0.0025.

Solution 5.
Solution
p̂ = 281/611 = 0.4607. Standard error:
√ √
p̂(1 − p̂) 0.4607 · 0.5393
SE = = = 0.0202.
n 611
At 95% confidence (z0.025 = 1.96):

p̂ ± z SE = 0.4607 ± 1.96(0.0202) = (0.421, 0.501).

95% CI for the proportion: (0.421, 0.501).

Solution 6.

Page 12
 Solution
Given data (hours): 8.2, 9.1, 7.7, 8.6, 6.9, 11.2, 10.1, 9.9, 8.9, 9.2, 7.5, 10.5.
Sample statistics:
s
x̄ = 9.15, s = 1.27, SE = √ = 0.367.
12
(a) With t0.025,11 = 2.201:

µ ∈ x̄ ± t SE = 9.15 ± 2.201(0.367) = (8.34, 9.96).

(b) Width at 90% (t0.05,11 = 1.796):

Width = 2 t SE = 2(1.796)(0.367) = 1.32.

95% CI (8.34, 9.96); Width90% = 1.32.

Solution 7.
Solution

R(Q1 , Q2 ) = Q1 Q2 + Q21 + 500.

(a) Differential approximation.

RQ1 = Q2 + 2Q1 , R Q2 = Q1 .

At (Q1 , Q2 ) = (100, 200): RQ1 = 200 + 200 = 400, RQ2 = 100. With ∆Q1 =
+1, ∆Q2 = −2:

∆R ≈ RQ1 ∆Q1 + RQ2 ∆Q2 = 400(1) + 100(−2) = 200.

(b) Constrained maximum, 12Q1 + 4Q2 = 800. Using Lagrange multipliers:

L = Q1 Q2 + Q21 + λ(800 − 12Q1 − 4Q2 ).

FOC:
Q2 + 2Q1 − 12λ = 0, Q1 − 4λ = 0 ⇒ λ = Q1
4
.
Hence Q2 + 2Q1 − 12( Q41 ) = Q2 − Q1 = 0 ⇒ Q2 = Q1 . Constraint: 12Q1 + 4Q2 =
16Q1 = 800 ⇒ Q1 = 50 ⇒ Q2 = 50.
Maximum revenue:

R∗ = 50 · 50 + 502 + 500 = 5500.

Q∗1 = 50, Q∗2 = 50, Rmax = 5500.

Page 13
Sample 4
Question 1. Let [ ] [ ]
1 −2 3 0
A= , B= .
2 1 −1 5
Find X such that XA = B.

Question 2. The interindustry transactions and final demand are given by:

Input / Output 1 2 3 Final demand

1 45 40 50 20
2 35 20 50 70
3 25 70 30 60

Find the unit consumption matrix.

Question 3. An aerospace company has submitted bids on two separate federal gov-
ernment defense contracts. The company president believes there is a 40% probability of
winning the first contract. If they win the first contract, the probability of winning the
second is 70%. However, if they lose the first contract, the probability of winning the
second contract decreases to 50%. Find the probability of winning the second contract.

Question 4. A municipal bus company has started operations in a new subdivision.

Records were kept on the numbers of riders on one bus route during early-morning week-
day service. The following table shows the proportions over all weekdays:

Number of riders 20 21 22 23 24 25 26 27
Proportion 0.02 0.12 0.23 0.31 0.19 0.08 0.03 0.02

(a) What is the probability that, on a randomly chosen weekday, there will be at least
24 riders from the subdivision on this service?

(b) Find the mean number of riders from this subdivision on a weekday.

Question 5. Hits on a personal website occur randomly and independently with an

average of five per week.

(a) Find the probability that the site gets 8 hits in a week.

(b) Find the probability that the site gets 10 or fewer hits in a week.

Question 6. A random sample of 270 homes was taken from a large population of older
homes to estimate the proportion of homes with unsafe wiring. If, in fact, 20% of the
homes have unsafe wiring, what is the probability that the sample proportion will be
between 16% and 24%?

Question 7. Suppose scores on exams in statistics are normally distributed with an

unknown population mean and a population standard deviation of 3 points. A random
sample of 36 scores is taken and gives a sample mean of 68.

Page 14
 (a) Find a 90% confidence interval for the population mean of statistics exam scores.

(b) At the 95% confidence level, what is the width?

Question 8. For a firm producing two goods under perfect competition, with prices
P1 = 60 and P2 = 75, given
T C = Q21 + Q1 Q2 + Q22 ,

(a) Find Q1 , Q2 that maximize profit.

(b) Find Q1 , Q2 that minimize cost subject to the constraint Q1 + Q2 = 200.

*Critical Values for the standard normal distribution:

z0,05 = 1, 645, z0,025 = 1, 96. z0,01 = 2, 33, z0,005 = 2, 58

————————————–End of test————————————–

Solution 1.
Solution

We have XA = B ⇒ X = BA−1 .
( ) ( )
1 −2 −1 1 1 2
A= , det A = 1 · 1 − (−2) · 2 = 5, A = .
2 1 5 −2 1

Hence
( ) ( ) ( ) ( 3 6)
−1 3 0 1 1 2 1 3 6
X = BA = · = = 5 5
.
−1 5 5 −2 1 5 −11 3 − 11
5
3
5

Solution 2.
Solution
Total output of sector j is the row sum xj of row j:

x1 = 45+40+50+20 = 155, x2 = 35+20+50+70 = 175, x3 = 25+70+30+60 = 185.

xij
The unit consumption (technical coefficients) matrix C = (cij ) with cij = is
xj
 45 40 50
 9 8 10

155 175 185 31 35 37
 35  7 
C=
 155
20
175
50 
185 
= 
 31
4
35
10 
37 
.
25 70 30 5 14 6
155 175 185 31 35 37

Solution 3.

Page 15
 Solution
Let A: win contract 1, B: win contract 2. Given P (A) = 0.40, P (B | A) = 0.70,
P (B | A) = 0.50.

P (B) = P (A)P (B | A) + P (A)P (B | A) = 0.40(0.70) + 0.60(0.50) = 0.58.

Solution 4.
Solution

(a) P (X ≥ 24) = 0.19 + 0.08 + 0.03 + 0.02 = 0.32 .

(b) Mean: ∑
E[X] = x p(x) = 22.99.

Solution 5.
Solution
Let X ∼ Poisson(λ = 5).

8 ∑
10
5k
−5 5
(a) P (X = 8) = e = 0.0653. (b) P (X ≤ 10) = e−5 = 0.9863.
8! k=0
k!

Solution 6.
Solution
With true p = 0.20, n = 270, the sampling distribution of p̂ is approximately
normal with √ √
p(1 − p) 0.2(0.8)
SE = = = 0.02434.
n 270
Bounds:
0.16 − 0.20 0.24 − 0.20
Z1 = = −1.64, Z2 = = 1.64,
0.02434 0.02434
so
P (0.16 ≤ p̂ ≤ 0.24) = P (−1.64 ≤ Z ≤ 1.64) = 0.8997.

Solution 7.

Page 16
 Solution
√
Known σ = 3, n = 36, X̄ = 68, SE = σ/ n = 3/6 = 0.5.
(a) 90% CI (z0.05 = 1.645):

µ ∈ X̄ ± z SE = 68 ± 1.645(0.5) = (67.18, 68.82).

(b) Width at 95% (z0.025 = 1.96):

Width = 2z SE = 2(1.96)(0.5) = 1.96.

Solution 8.

Page 17
Solution
Revenue:
R(Q1 , Q2 ) = P1 Q1 + P2 Q2 = 60Q1 + 75Q2 .
Cost:
T C = Q21 + Q1 Q2 + Q22 .
Profit:

π = R − T C = 60Q1 + 75Q2 − (Q21 + Q1 Q2 + Q22 ) = 60Q1 − Q21 + 75Q2 − Q1 Q2 − Q22 .

(a) Profit maximization.

First-order partial derivatives:
∂π ∂π
= 60 − 2Q1 − Q2 = 0, = 75 − Q1 − 2Q2 = 0.
∂Q1 ∂Q2
Solve the system:
{
2Q1 + Q2 = 60,
⇒ Q1 = 15, Q2 = 30.
Q1 + 2Q2 = 75.

Second-order partial derivatives (Hessian entries):

A = πQ1 Q1 = −2, B = πQ1 Q2 = −1, C = πQ2 Q2 = −2.

Determinant test:

D = AC − B 2 = (−2)(−2) − (−1)2 = 4 − 1 = 3 > 0, A < 0.

Hence the critical point is a maximum.

Compute the maximum profit:

πmax = π(15, 30) = 60(15)+75(30)−(152 +15·30+302 ) = 900+2250−1575 = 1575.

Q∗1 = 15, Q∗2 = 30, πmax = 1575.

(b) Cost minimization subject to Q1 + Q2 = 200.

Minimize T C = Q21 + Q1 Q2 + Q22 subject to the linear constraint.
Lagrangian:

L = Q21 + Q1 Q2 + Q22 + λ(200 − Q1 − Q2 ).

First-order conditions:
∂L ∂L
= 2Q1 + Q2 − λ = 0, = Q1 + 2Q2 − λ = 0, Q1 + Q2 = 200.
∂Q1 ∂Q2

Subtract the first two:(2Q1 + Q2 ) − (Q1 + 2Q2 ) = 0 ⇒ Q1 = Q2 . Then Q1 + Q2 =

200 ⇒ Q1 = Q2 = 100.
Compute minimum cost:

Qmin
1 = 100, Qmin
2 = 100, T Cmin = 30,000.
Page 18
Sample 5
Question 1. Solve the following linear system:


2x1 − x2 + x3 = −2,
2x1 + x2 − 2x3 = 6,


x1 + 2x2 + 3x3 = 2.

Question 2. At a university, 12% of students have completed a MOOC (Massive Open

Online Course), and 45% of students are evening-program students. Among evening-
program students, 30% have completed a MOOC.

(a) Find the probability that a randomly chosen student is an evening-program student
and has completed a MOOC.

(b) Are the events being an evening-program student and having completed a MOOC
independent? Justify briefly.

Question 3. A discrete random variable X has the following distribution:

X 0 1 2 4
P (X) 0.25 0.35 0.30 0.10

(a) Compute the variance and standard deviation of X.

(b) Let Y = 3X − 2. List the possible values of Y and compute E[Y ].

Question 4. According to a study, the heights of Vietnamese adult females are nor-
mally distributed with mean 62.5 inches and standard deviation 2.3 inches. Suppose one
Vietnamese adult female is chosen at random. Let X be her height.

(a) Fill in the blanks: X ∼ . . . (. . . , . . .)

(b) Find the probability that she is over 66 inches tall. Would you expect to meet many
females over 66 inches?

Question 5. A statistics instructor computed x̄ = 72.1 and s = 6.2 from a sample of

n = 64 observations. Construct a 95% confidence interval for the population mean.

Question 6. Surveys on student opinions and device ownership were conducted at a

large college.

(a) Out of 800 students, 61% support a proposed campus smoking ban. Compute a
90% confidence interval and margin of error for the true percent who support the
ban.

(b) In a separate sample of 300 students, 54% reported owning both a laptop and a
tablet. Compute a 95% confidence interval for the true percent who own both.

Page 19
Question 7. A firm has a production function

Q = 2K 0.3 L0.5 .

(a) Given that the current levels of K and L are 7 and 4, respectively, estimate the
change in output when labor decreases by 1 unit and capital increases by 1 unit.

(b) Assume the rent of capital is 12 USD, the cost of labor is 4 USD, and the firm
produces under a fixed budget of 9600 USD. Find the values of K and L that
maximize Q.

* Critical values for the standard normal distribution:

z0.05 = 1.645, z0.025 = 1.96, z0.01 = 2.33, z0.005 = 2.58.

End of Test

Solution 1.
Solution
Augmented matrix → rowechelon form:
   
2 −1 1 −2 2 −1 1 −2
R2 ←R2 −R1 , R3 ←2R3 −R1
 2 1 −2 6  −−−−−−−−−−−−−−−−→  0 2 −3 8 
1 2 3 2 1 5 5 2
   
2 −1 1 −2 2 −1 1 −2
R3 ←R3 −R1
R3 ← 2R3 + R2 :  0 2 −3 8  −−−−−−−→  0 2 −3 8  .
2 10 7 12 0 11 6 14
 
2 −1 1 −2
R3 ← 2R3 + 11R2 :  0 2 −3 8 .
0 0 −45 180
Back substitution gives x3 = 180
−45
= − 28
25
, x2 = 58
25
, x1 = 18
25
.
( )
(x1 , x2 , x3 ) = 18 58
, ,
25 25
− 25
28
.

Solution 2.
Solution
Let M : completed a MOOC, E: evening program. Given P (M ) = 0.12, P (E) =
0.45, P (M | E) = 0.30.
(a)
P (E ∩ M ) = P (E)P (M | E) = 0.45 × 0.30 = 0.135.
(b) Independence would require P (E ∩ M ) = P (E)P (M ) = 0.45 × 0.12 =
0.054 ̸= 0.135. Hence Not independent.

Page 20
Solution 3.
Solution
Compute moments:

E[X] = 0(0.25) + 1(0.35) + 2(0.30) + 4(0.10) = 1.35,

E[X 2 ] = 0(0.25) + 1(0.35) + 4(0.30) + 16(0.10) = 3.15.

√
Var(X) = E[X 2 ] − E[X]2 = 3.15 − 1.352 = 1.3275, SD(X) = 1.3275 ≈ 1.1522.
For Y = 3X − 2: possible values {−2, 1, 4, 10} and

E[Y ] = 3E[X] − 2 = 3(1.35) − 2 = 2.05.

Var(X) = 1.3275, SD(X) ≈ 1.1522; Y ∈ {−2, 1, 4, 10}, E[Y ] = 2.05.

Solution 4.
Solution

(a) X ∼ N (62.5, 2.32 ).

(b)
66 − 62.5
Z= = 1.5217, P (X > 66) = 1 − F (1.5217) ≈ 0.0640 .
2.3
About 6.4% are above 66 inches uncommon but not extremely rare.

Solution 5.
Solution
s 6.2
Given n = 64, x̄ = 72.1, s = 6.2, SE = √ = = 0.775. Using t0.025,63 ≈ 2.00,
n 8

µ ∈ x̄ ± t SE = 72.1 ± 2.00(0.775) = (70.55, 73.65).

95% CI: (70.55, 73.65).

Solution 6.

Page 21
 Solution
√
(a) p̂ = 0.61, n = 800, SE = 0.61·0.39
800
= 0.01724. At 90%, z0.05 = 1.645 ⇒ ME =
1.645 SE = 0.02837.

CI90% = (0.582, 0.638), ME = 0.0284 (2.84%).

√
(b) p̂ = 0.54, n = 300, SE = 0.54·0.46
300
= 0.02877. At 95%, z0.025 = 1.96 ⇒
ME = 1.96 SE = 0.05640.

CI95% = (0.484, 0.596).

Solution 7.
Solution
Production function:
Q(K, L) = 2K 0.3 L0.5 .
(a) Differential approximation at (K, L) = (7, 4) with ∆K = +1, ∆L =
−1.
QK = 0.6 K −0.7 L0.5 , QL = K 0.3 L−0.5 .
At (7, 4): QK ≈ 0.3072, QL ≈ 0.8965. Hence

∆Q ≈ QK ∆K + QL ∆L ≈ 0.3072 − 0.8965 = −0.589 (approx.) .

(b) Maximize Q subject to 12K + 4L = 9600 (Lagrange multipliers).

Set
L(K, L, λ) = 2K 0.3 L0.5 + λ (9600 − 12K − 4L).
Firstorder conditions:
∂L ∂L
= 0.6 K −0.7 L0.5 − 12λ = 0, = K 0.3 L−0.5 − 4λ = 0,
∂K ∂L
∂L
= 9600 − 12K − 4L = 0.
∂λ
Divide the first two equations to eliminate λ:

0.6 K −0.7 L0.5 12λ L L

0.3 −0.5
= = 3 =⇒ 0.6 = 3 =⇒ = 5.
K L 4λ K K
Thus L = 5K. Plug into the budget:

12K + 4(5K) = 32K = 9600 =⇒ K ∗ = 300, L∗ = 1500.

K ∗ = 300, L∗ = 1500.

Page 22